Johnson Outdoors Inc. (NASDAQ:JOUT) Q4 2022 Earnings Call Transcript
Johnson Outdoors Inc. (NASDAQ:JOUT) Q4 2022 Earnings Call Transcript December 9, 2022
Johnson Outdoors Inc. beats earnings expectations. Reported EPS is $0.95, expectations were $0.37.
Operator: Hello, everyone, and welcome to the Johnson Outdoors Fourth Quarter 2022 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. Prior to the question-and-answer session, all participants will placed -- will be placed in a listen-only mode. After the prepared remarks, the question-and-answer session will begin. This call is being recorded. Your participation implies consent to our recording this call. If you do not disagree with these terms, simply drop off the line. I would now like to turn the call over to Pat Penman from Johnson Outdoors. Please go ahead, Ms. Penman.
Patricia Penman: Thank you. Good morning, everyone. Thank you for joining us for our discussion of Johnson Outdoors results for the 2022 fiscal fourth quarter. If you need a copy of today's news release, it is available on our Web site 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 myself. It is now my pleasure to turn the call over to Helen Johnson-Leipold.
See also 22 Most Indebted Companies in the World in 2022 and 15 Best Electric Car Stocks To Buy
Helen Johnson-Leipold: Thanks, Pat. Good morning. I'll begin with an overview on the fiscal year results, and then I'll share perspective on the performance and outlook for our business. Dave will review financial highlights, and then we'll take your questions. In fiscal 2022, total company sales declined 1% and to $743.4 million compared to the prior record setting fiscal year. Net income for the year was $44.5 million or $4.37 per diluted share, a 47% decline from the prior fiscal year. Operating profit decreased 40% to $66.3 million versus $111.3 million in prior fiscal year with the challenging supply chain situation, primarily in our Fishing business, significantly impacting our profitability. Managing the challenging supply chain environment remains a key priority, and we will continue to evaluate all avenues to mitigate cost pressures into the next fiscal year.
In Fishing, while supply chain challenges persisted throughout the first part of the fiscal year, we saw supply availability start to improve during the fiscal fourth quarter. Sustaining innovation leadership in fishing is also our focus, and we are always looking for new ways that Humminbird and Minn Kota products can connect and work together to deliver new benefits to anglers. Our recent innovation in Humminbird, the award-winning MEGA Live Imaging TargetLock used in conjunction with our Minn Kota Ultrex trolling motor makes it easier for anglers to stay on point and catch more fish. During fiscal 2022, MEGA Live Imaging TargetLock received the best in category for electronics honors at this year's ICAST, marking our 11th award in this category in the past 12 years.
Moving on to our Watercraft Recreation business, the success of our Old Town Sportsman line gave us momentum in a moderating market. Part of this innovative line of boats is the award-winning wildly versatile lightweight sportsman Discovery Solo 119, a solo canoe use a paddles like a kayak and is great for fishing, waterfowl hunting and enjoying lakes and rivers. The Sportsman line offers a Watercraft for everyone looking to enjoy a great day on the water. Our camping business saw double-digit growth even as the market started to moderate compared to the unprecedented high demand of last fiscal year. Participation in the activity remains high and demand for our unique consumer tents and stoves is strong. And in Jetboil, consumers remain excited about the innovative superlight Stash Stove that continues to grow since launch.
Finally, our diving business continues on a growth trajectory as dive markets continue to experience recovery of several reasons around the world reopened and tourism resumed. Sustaining innovation is critical to our growth, and divers are loving the award-winning powerful Seawing Supernova Fin that SCUBAPRO recently launched. The Supernova is the go-to fin for avid recreational and professional divers seeking maximum speed, power and kicking control in all diving conditions. Our continued innovation efforts will ensure SCUBAPRO's position as the most trusted guide brand in the world. In summary, it's good news that we are seeing some relief with supply chain issues, and we continue to look at all options to mitigate challenges in our overall profitability.
Orders for our products remain strong, and we continue to work hard to replenish inventory levels with our loyal customers. While it's unclear the extent to which economic conditions and inflation may affect consumer buying behavior in the future, as always, our team takes the long-term view, working hard to position our brands and businesses for growth well beyond the next quarter or next year. Now I'll turn the call over to Dave for a review of the financial highlights.
David Johnson: Thank you, Helen. Good morning, everyone. I want to highlight a few items from the fourth quarter and of the year. As Helen mentioned, supply availability starts to improve in the fiscal fourth quarter. As a result, total company fourth quarter sales were up 18% compared to the prior year's fourth quarter. While Fishing and Diving saw strong revenue growth in the fourth quarter, Camping and Watercraft Recreation declined versus the previous fourth quarter. For fiscal '22, gross margin of 36.5% is down 8 points from last fiscal year due to significant increases in material costs. We saw some relative improvement in our costs in the fourth quarter, but we expect margins to continue to be impacted by inflationary pricing conditions.
Operating expenses for fiscal '22 decreased $17.8 million versus the prior year. The decrease was primarily due to lower variable and deferred compensation expense incurred in fiscal '22. Warranty and bad debt expense were also down versus last year. Profit before income taxes was $58.9 million versus $112.9 million from the prior year. Net income for fiscal year was $44.5 million, down 47% from the prior fiscal year. The effective tax rate was 24.4% compared to last year's rate of 26.2%. As a reminder, we built significantly higher inventory levels for several quarters to help mitigate supply chain disruptions and meet increased demand for our products. Heading into fiscal '23, we remain focused on monitoring demand and proactively managing higher-than-normal inventory.
We continue to have no debt on the balance sheet and our cash position enables us to invest in opportunities to strengthen the business. We remain confident in our ability to deliver long-term value and consequently pay out cash dividends to our shareholders. Now I'll turn the call over to the operator for the Q&A session. Operator?
To continue reading the Q&A session, please click here.
