Johnson Outdoors (US:JOUT)2023-05-05 20:42Financial Data and Key Metrics Changes - Sales in the second fiscal quarter increased by 7% to $202.1 million compared to $189.6 million in the prior year [4] - Year-to-date sales increased by 11% over the previous fiscal year's first six months [4] - Profit before income taxes for the quarter rose to $19.9 million from $13.2 million in the prior year [19] - Net income for the second quarter was $14.9 million, up 15.1% from the prior fiscal year [26] - Gross margin improved to 37.3% from 36.2% in the previous year [24] Business Line Data and Key Metrics Changes - The Diving business showed momentum as the market rebounded from pandemic lows, benefiting from increased global travel [7] - The Fishing segment experienced improved supply and component availability, allowing for more customer orders [20] - The Camping and Watercraft Recreation markets faced challenges due to post-pandemic slowdowns and high retailer inventory levels [7] Market Data and Key Metrics Changes - Retail inventory levels are currently healthy, with a solid flow of product being filled [28] - Consumer spending has slowed, impacting the Camping and Watercraft Recreation segments [7] Company Strategy and Development Direction - The company is focused on a pipeline of new products across all brands and is monitoring marketplace conditions and consumer behavior [8] - Johnson Outdoors aims to position its brands for long-term growth despite current market challenges [8] Management's Comments on Operating Environment and Future Outlook - Management noted that while the pandemic had previously fueled demand, the current market is more challenging with uncertainties affecting consumers [5] - The company expects margins to be challenged in the coming months due to higher cost inventory and inflation concerns [24][26] Other Important Information - Raw material inventory decreased by 25%, with plans for further reduction by the end of the fiscal year [9] - Operating expenses increased by $10.8 million due to higher sales volume-driven expenses and warranty costs [10] Q&A Session Summary Question: What is the status of the backlog and incoming orders? - Management indicated that it is difficult to distinguish between backlog and new orders but noted a solid flow of product [28] Question: How are operating expenses expected to trend? - Management acknowledged higher warranty and professional service costs but indicated that some increases may be one-time events [30] Question: When might the weakness in the Watercraft Recreation and Camping segments bottom out? - Management stated it is hard to predict but hopes for improvement as the season progresses [32] Question: What are the expectations for gross margins moving forward? - Management expressed optimism for margin improvement as high-cost inventory is cleared, but specific timelines were not provided [33] Question: What is the company's appetite for acquisitions? - Management confirmed ongoing interest in strategic acquisitions and noted some moderation in valuation multiples [34]