Johnson Outdoors (JOUT) - 2024 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 FY2024 and Q1 FY2023, along with detailed accounting notes Condensed Consolidated Statements of Operations Net sales for Q1 FY2024 were $138.6 million, with net income of $4.0 million, both significantly lower than the prior year Consolidated Statements of Operations (Unaudited) | (In thousands, except per share data) | Three Months Ended Dec 29, 2023 | Three Months Ended Dec 30, 2022 | | :--- | :--- | :--- | | Net sales | $138,644 | $178,337 | | Gross profit | $52,854 | $62,779 | | Operating profit | $46 | $5,472 | | Net income | $3,955 | $5,879 | | Net income per common share - Diluted (Class A) | $0.38 | $0.57 | Condensed Consolidated Balance Sheets Total assets were $692.7 million, liabilities $188.8 million, and shareholders' equity $503.9 million as of December 29, 2023, reflecting changes in inventories Key Balance Sheet Items (Unaudited) | (In thousands) | Dec 29, 2023 | Sep 29, 2023 | Dec 30, 2022 | | :--- | :--- | :--- | :--- | | Total current assets | $476,224 | $458,656 | $486,524 | | Inventories | $267,321 | $261,474 | $251,525 | | Total assets | $692,683 | $681,606 | $689,096 | | Total current liabilities | $104,067 | $104,006 | $117,438 | | Total liabilities | $188,813 | $181,869 | $194,875 | | Total shareholders' equity | $503,870 | $499,737 | $494,221 | Condensed Consolidated Statements of Cash Flows Cash used for operating activities increased to $33.7 million, investing activities provided $4.7 million, resulting in a $31.4 million decrease in cash and cash equivalents Cash Flow Summary (Unaudited) | (In thousands) | Three Months Ended Dec 29, 2023 | Three Months Ended Dec 30, 2022 | | :--- | :--- | :--- | | Net cash used for operating activities | $(33,687) | $(17,570) | | Net cash provided by (used for) investing activities | $4,685 | $(6,649) | | Net cash used for financing activities | $(3,588) | $(3,570) | | Decrease in cash and cash equivalents | $(31,393) | $(26,381) | Notes to Condensed Consolidated Financial Statements This section provides detailed accounting policy explanations for financial statement line items, including notes on debt status and the exit of the Eureka! brand - The company had no debt outstanding as of December 29, 2023, September 29, 2023, or December 30, 2022[72] - The company has a $75 million revolving credit facility, which was amended to extend its expiration to July 15, 2026[73][74] - During the fourth quarter of fiscal 2023, the company approved plans to fully exit the Eureka! brand of the Camping segment by liquidating remaining inventory and winding down operations[111] - The Fishing segment sold a building during the first quarter of fiscal 2024, resulting in a gain of approximately $1.9 million[112] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 FY2024 results, highlighting a 22% decrease in net sales to $138.6 million due to softening demand, which significantly impacted operating profit despite improved gross margin - Net sales for Q1 FY2024 decreased by 22% to $138.6 million from $178.3 million in Q1 FY2023, primarily due to softening consumer demand for outdoor recreation products[127][133] - Gross profit margin improved to 38.1% from 35.2% year-over-year, driven by decreased costs of certain materials and lower inbound freight[141] - Operating profit fell sharply to $46 thousand from $5.47 million in the prior-year quarter, as cost improvements were insufficient to offset the decline in sales volume[129][143] Results of Operations First-quarter results show sales declines across most segments: Fishing down 20%, Camping 49%, Watercraft Recreation 50%, and Diving 8%, despite an improved gross margin Net Sales by Segment (in thousands) | Segment | Q1 FY2024 | Q1 FY2023 | % Change | | :--- | :--- | :--- | :--- | | Fishing | $110,492 | $138,041 | -20.0% | | Camping | $5,913 | $11,613 | -49.1% | | Watercraft Recreation | $4,813 | $9,658 | -50.2% | | Diving | $17,478 | $19,059 | -8.3% | | Total | $138,644 | $178,337 | -22.2% | - The Fishing segment's sales decline was due to customers tightly managing inventory levels in a softened consumer market, contrasting with the prior year's inventory replenishment[136] - The Camping segment's sales decrease included a $2.6 million impact from the previously reported sale of the Military and Commercial Tents product lines[137] - Other income increased by $2.8 million, driven by a $1.9 million gain on the sale of a building and a $1.3 million increase in net investment gains on deferred compensation plan assets[145] Liquidity and Financial Condition The company maintained a debt-free balance sheet with $109.6 million in cash and short-term investments, with cash used for operations increasing to $33.7 million due to working capital changes - The company had no debt and a debt-to-total capitalization ratio of 0% as of December 29, 2023[150] - Inventories increased by $15.8 million year-over-year to $267.3 million due to lower customer replenishment and softening consumer demand, primarily in the Fishing segment[151] - Cash used for operations increased to $33.7 million for the quarter, compared to $17.6 million in the prior year, primarily due to decreased sales volumes and other working capital changes[153] Quantitative and Qualitative Disclosures about Market Risk No significant changes occurred in the company's market risk exposures, including foreign currency, interest rates, commodity prices, or inflation, during Q1 FY2024 - There have been no significant changes to the company's market risk related to foreign currency exchange, interest rates, commodity prices, or inflation in the first quarter of fiscal 2024[163] Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the last fiscal quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a level of reasonable assurance as of December 29, 2023[164] - No material changes were made to the company's internal control over financial reporting during the last fiscal quarter[166] PART II OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings but does not anticipate any material adverse effect on its financial condition or results - The company does not believe any pending litigation will have a material adverse effect on its financial condition, results of operations, liquidity, or cash flows[167] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's most recent Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's most recent Form 10-K[168] Exhibits This section indexes exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial data in XBRL format - Exhibits filed with this report include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and financial statements in Inline XBRL format[173]