Johnson Outdoors (JOUT) Q2 2025 Earnings Call May 02, 2025 11:00 AM ET Company Participants Patricia Penman - Vice President of Marketing Services & Global CommunicationHelen Johnson-Leipold - Chairman & CEODavid Johnson - CFO & VP Conference Call Participants Anthony Lebiedzinski - Senior Equity Research Analyst Operator Hello, everyone, and welcome to the Johnson Outdoors Second Quarter twenty twenty five Earnings Conference Call. Today's call will be led by Helen Johnson Leopold, Johnson Outdoors' Chairm ...

Financial Data and Key Metrics Changes - Gross margin in the second quarter was 35%, slightly up from the previous year's quarter, supported by cost savings efforts despite ongoing pricing discounting in the marketplace [11] - Operating expenses decreased by $7.7 million compared to the prior year’s second quarter, with a $4.3 million decline attributed to lower volume-related expenses and decreased promotion expenses [11] - Inventory balance as of March was $180 million, down approximately $69 million from last year's second quarter and decreased from the fiscal year-end [12] Business Line Data and Key Metrics Changes - The fishing business saw positive results from new product launches, including the Humminbird brand's new technology, which exceeded demand expectations [5] - In the camping and watercraft segment, the Jetboil brand launched new fastboil systems, with orders outpacing expectations [6] - The Old Town brand launched five new watercraft additions, expanding its popular Sportsman line and entering new recreational categories [7] - The diving business continues to face challenges due to global economic uncertainties and consumer travel, prompting a focus on operational efficiencies [8] Market Data and Key Metrics Changes - The overall market environment remains challenging, with cautious retail and trade conditions impacting sales [5][26] - Sales were reported to be down approximately 4% year-over-year, with consistent tough market conditions noted throughout the quarter [18][26] Company Strategy and Development Direction - The company is focused on innovation as a strategic priority, with ongoing investments in new product development across various business lines [5][16] - Strategies to mitigate tariff impacts include adjusting supply chain strategies, seeking operational efficiencies, and considering pricing adjustments [9][32] - The company maintains a debt-free balance sheet and solid cash position, which are viewed as competitive advantages in uncertain times [10][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the continued market challenges and emphasized the importance of innovation and operational efficiency for future growth [5][10] - The management expressed confidence in the ability to navigate current challenges and create long-term value for shareholders [13] Other Important Information - The company has acquired a supplier for its ScubaPro brand, which is expected to drive future innovation and enhance operational efficiency [8] Q&A Session Summary Question: Pipeline for new products - Management indicated that new products for fishing and camping have been launched and are exceeding expectations, with ongoing efforts in long-term innovation [15][16] Question: Trends during the quarter - Management noted a consistent tough environment, with no significant changes in consumer sentiment or retailer hesitation throughout the quarter [26] Question: Impact of tariffs on ordering patterns - Initial retailer reactions to tariffs have not shown a significant pullback, but the marketplace is expected to remain challenged for the rest of the season [29] Question: Exposure to China and response to tariffs - The company imports a fair amount of products from China and Southeast Asia, and is actively working on mitigation strategies to address tariff impacts [32][33] Question: Magnitude of gross margin impacts - Cost savings are expected to provide a benefit of one to two points to gross margin, with ongoing efforts to expand these savings [34][35] Question: Unusually high tax rate in the quarter - The high tax rate was attributed to income and expense in different jurisdictions and an accrual from tax audits in Europe, which is considered a one-time event [38]