Johnson Outdoors (US:JOUT)2021-08-09 16:10Financial Data and Key Metrics Changes - Sales surged to $213.6 million during the third quarter, a 54% increase compared to the same quarter last year, with year-to-date total company sales at $585.4 million, reflecting a 36% increase over the previous fiscal nine-month period [6][13] - Total company operating profit for the third quarter was $38.1 million, compared to $12.9 million in the previous quarter, with net income more than doubling to $28.8 million or $2.83 per diluted share [7][13] - Gross margin improved to 45.7%, slightly up from the prior year quarter, driven by operational efficiencies despite increased costs due to tariffs and inbound airfreight [13] Business Line Data and Key Metrics Changes - In the fishing segment, high demand for Minn Kota and Humminbird technologies continued, with notable innovations like the MEGA Live Imaging technology receiving industry recognition [7][8] - The watercraft recreation segment saw growth in the fishing kayak market, driven by enthusiasm for new product lines [9] - Camping gear demand remained strong, particularly for Eureka and Jetboil products, with the Jetboil Stash Stove being highlighted for its lightweight design [10] - The diving market began to recover as pandemic-related travel restrictions eased, showing strong performance compared to both 2020 and 2019 [11] Market Data and Key Metrics Changes - Overall, the company experienced unprecedented results due to strong demand for outdoor activities, with a noted increase in consumer interest in spending time outdoors [6][12] - Supply chain issues and logistics disruptions were acknowledged as potential challenges for meeting increased demand in the future [12] Company Strategy and Development Direction - The company remains committed to investing in key strategic drivers, understanding consumer needs, sustaining innovation leadership, and optimizing digital consumer experiences [12] - Future growth strategies include a focus on mergers and acquisitions, organic growth investments, and maintaining a strong cash position to support these initiatives [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage supply chain challenges while maintaining strong sales performance [14] - There was no immediate impact on consumer demand due to the Delta variant, but management indicated they would continue to monitor the situation [18] Other Important Information - The effective tax rate for the fiscal year-to-date was reported at 25.3%, slightly higher than the previous year's rate [13] - The company is actively exploring various uses for accumulated cash, including potential special dividends and share buybacks [24] Q&A Session Summary Question: What are the inventory levels at key retailers? - Management indicated that inventory levels have been stressed due to high demand and are below normal [16][17] Question: Have there been notable changes in end-user demand due to the Delta variant? - Management noted that there has not been a reaction to the Delta variant yet, but they are monitoring the situation closely [18] Question: How has airfreight impacted margins this quarter? - Airfreight usage has increased significantly this year to combat container shortages, impacting margins modestly compared to cost of goods sold inputs [19] Question: What are the expectations regarding labor costs? - Management hopes that higher healthcare costs are a one-off issue and indicated that labor cost pressures are manageable for now [20][21] Question: What are the cash flow priorities moving forward? - The primary focus is on business growth, including M&A and organic growth investments, while also considering dividend growth and alternative cash uses [23][24]