Johnson Outdoors Inc (JOUT) 2021 Q1 法說會逐字稿

Hello, everyone, and welcome to the Johnson Outdoors First Quarter 2021 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 and Chief Financial Officer. (Operator Instructions)

This call is being recorded. Your participation implies consent to our recording this call. If you do not agree to these terms, simply drop off the line.

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

Thank you. Good morning, everyone. Thank you for joining us for our discussion of Johnson Outdoors results for the 2021 fiscal first quarter. If you need a copy of today's news release, it is available on our website at johnsonoutdoors.com under Investor Relations.

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

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

Thanks, Pat. Good morning, and thank you for joining us. I'll begin with comments on performance this quarter and outline priorities going forward. Dave will review financial highlights, and then we'll take your questions.

First fiscal quarter sales reflect the continued impact of the COVID-19 pandemic, driving high demand for outdoor recreation products that began in the second half of our 2020 fiscal year. Consumer demand remained strong during the quarter, and customers replenished their depleted inventory levels in anticipation of the upcoming warm weather recreation season.

First quarter sales rose 29% to $165.7 million versus $128.1 million in the prior year period. Operating profit of $23.6 million was up significantly versus $6.8 million in the prior year first quarter. Net income was $19.8 million or $1.96 per diluted share, which compared very favorably to the previous year's first quarter net income of $6.4 million or $0.64 per diluted share. Dave will provide more details on the quarter's results in his remarks.

In fishing, our largest business, demand remains high across all brands, and we continue to build on a powerful legacy of innovation that drives both seasoned anglers and new anglers to Johnson Outdoors for a great fishing experience. Humminbird's award-winning MEGA 360 imaging, the only sonar option that provides a high-resolution 360-degree view with unmatched detail and coverage, continues to do well in its second year on the market. Before MEGA 360, anglers were limited to a sonar view either below or to the sides of their boat while moving. Now with MEGA 360, anglers can make an accurate cast in any direction to either side in front of and behind them, even if the boat is anchored. When MEGA 360 imaging is used together with Minn Kota Spot-Lock technology, it provides anglers with an effortless command of their boat and an uncompromised view of fish and the world below.

We are constantly looking for ways that our products can easily integrate and communicate, and we continue to enhance our One-Boat Network, enabling anglers to control their connected Minn Kota trolling motor, Talon and Raptor shallow water anchors and Cannon downrigger directly from their Humminbird unit.

Humminbird also recently started shipping a new generation of Helix Fishfinders providing anglers with the latest and innovative imaging technology with MEGA Imaging Plus in a variety of screen sizes to ensure there is a Helix to fit any angler's needs. The big screen model of that offering, the new Helix 15 model, boasts a giant 15.4-inch ultra-bright and crystal clear display that enables visibility of the details provided by exclusive Humminbird sonar navigation and networking technologies. The Helix 15, along with Humminbird's ultra big screen SOLIX series rounds out our product offering of the very best in large-screen fishfinders.

In Minn Kota, we are continuing to see positive sales momentum with the award-winning Raptor shallow water anchor. Raptor is the only shallow water anchor to feature 2 industry first technologies, active anchoring and auto bottom mode, which enable these shallow water anchors to automatically monitor the water in the bottom conditions to keep the boat anchored firmly in place no matter what the fishing situation is that they encounter. Looking ahead, sustaining our innovation and technology leadership position in the fishing market remains a top priority, and we have more exciting new products in the pipeline.

In Watercraft Recreation, we saw strong demand across all product lines and continued enthusiasm for our Old Town Sportsman line of power, pedal and paddle fishing kayaks that was launched last fiscal year. The flagship model of this innovative new line, the award-winning Sportsman Autopilot 120, utilizes a GPS-enabled Minn Kota trolling motor to propel, steer and anchor the kayak with its unique Spot-Lock technology, providing kayak anglers with hands-free fishing. We hope to continue the positive momentum of the Sportsman line in its second year on the market.

Camping is one of the most accessible outdoor activities that people have been able to do safely, and both our Jetboil and Eureka! brands have benefited from the surge of participation in the activity, and our hard work in understanding our target consumer is paying off. Demand for Eureka! tents and stoves continues to beat expectations. And Jetboil, the technology leader in portable outdoor cooking systems, just recently launched exciting new innovation called the Stash. The Stash is the lightest all-in-one backpacking stove system that Jetboil has ever made. And we are excited for our newest technology to hit online and retail shelves very soon.

SCUBAPRO is the most trusted dive brand in the world. And while the destination diving market continues to be impacted by travel restrictions, we're continuing our work to promote and support local diving. While we are taking steps to simplify our diving business during this challenging time, our team continues to focus on investing in innovation and enhancing our digital presence globally with new European websites and e-commerce. These efforts will ensure SCUBAPRO is in a strong position for the future.

It was an unprecedented start to the year. While indications are strong that it will be good -- a good season ahead and people will continue to be eager to get outdoors, the COVID-19 pandemic still brings uncertainty and challenges to work through. Looking ahead, we will continue to focus on keeping pace with demand as well as leveraging our market-leading brands and driving innovation to maximize the heightened interest in outdoor recreation.

Our ongoing investment into understanding our consumers, sustaining innovation leadership, identifying new sources and paths of growth in our markets, as well as optimizing our digital consumer experience as more and more consumers research and purchase online, are all key to ensuring progress towards our goal of delivering sustained profitable growth.

Now I'll turn the call over to Dave for a review of the financial highlights.

Thank you, Helen. Good morning, everyone. As Helen mentioned, we came into our fiscal first quarter with a strong demand in our Fishing, Camping and Watercraft Recreation businesses. We've been working hard to produce as much as we can, including adding more shifts and managing our supply chain to increase capacity where possible.

Operating profit was up significantly versus the prior year quarter, driven primarily by sales growth year-over-year. Gross margin of 45.3% is up 3.4 points from last year's first quarter, primarily driven by a higher absorption of fixed cost due to increased sales volume, and we had an improved product mix.

Operating expenses rose due to higher volume-related expenses and the impact of favorable market conditions on the company's deferred compensation plan assets. This resulted in approximately $1.4 million of higher deferred compensation expense in the current year quarter, which was completely offset by a gain in other income related to marking the assets to market.

Net income for the year was $19.8 million compared to $6.4 million in the prior fiscal first quarter. The effective tax rate is 23.7% compared to last year's rate of 25.1%. We expect the full year tax rate to be in the mid-20s.

Net working capital is up versus last year's first quarter due to higher receivables and increased inventory. While we're seeing strong demand, like others in the industry, we continue to actively manage risks associated with our global supply chain. Our balance sheet is strong, and our healthy cash position will continue to provide a competitive advantage as we make smart investments to strengthen the business and drive value for our shareholders.

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

(Operator Instructions) Your first question comes from Anthony Lebiedzinski from Sidoti & Company.

Certainly impressive performance. So looking at the top line, can you give us a sense as to the volume versus ASP, if we could just start with that, please?

Yes, Anthony. It's actually more unit volume-related than ASP for the quarter, at least. We're seeing kind of a broad-based increase in volume, both lower-priced, mid-priced, high-priced products. So at least for the quarter, it hasn't been a ton of ASP enhancement.

Got it. Okay. Also, you guys have a sense as to the growth in the participation rate from consumers that you're looking to engage in outdoor recreation? Just wondering about like how many new customers enter the market and your sense for the upcoming season?

Well, as far as participation rate, we don't have a specific way of getting at that data, and it's very different by business. So we can't give you that answer. It's our assumption that there are new consumers coming in as well as more active participation by existing consumers. And I think we could say that across all the outdoor spaces that we've seen growth in. So until we get some participation data from syndicated sources, which have a lag time, I think at this point, it's truly assumption. But we definitely feel that there are some new participants in the market across the board.

Okay. Got it. Good to hear. So -- and as far as the new product innovation, yes, you mentioned some examples as far as the fishfinders and some others. So when you look at the upcoming season, I mean, would you say that you're going to be introducing more new products than usual? Or is this kind of the typical kind of pipeline of new products? And if there was any one category other than the fishfinders where you're particularly excited about for new product introductions?

Well, I think we've got new products for every business. And in fishing, this is a solid year, and we talked about a few of those. So I don't think it's any different than the past. It's just part of us doing business. I mean, we try to innovate and have something new every year, depending on the category.

Got it. Okay. Perfect. Okay. And then as far as the supply chain constraints, can you just tell a little bit more detail as to what you're -- obviously, it didn't look like it impacted your first fiscal quarter. But can you give us some more details about what you're seeing there?

Yes. I mean, like a lot of other companies, we're seeing a lot of longer lead times and difficult to getting some product out of Asia for electronic components, in particular. And then logistics constraints, as everyone's heard about at the port and getting shipping containers here on time. So right now, I think we seem to be in okay shape. It hasn't necessarily affected us currently. But we're looking into the season and just something we're trying to actively manage.

(Operator Instructions) There are no further questions at this time. I would like to turn the conference back to Ms. Helen Johnson-Leipold.

Thank you, everyone, for joining us today. Hope you stay healthy, stay safe, and hope you have a great day. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.