Q3 2020 Johnson Outdoors Inc Earnings Call
[music].
Hello, everyone and welcome to the Johnson outdoors third quarter 2020 earnings Conference call, Helen Johnson, Leipold, Johnson outdoors, Chairman and Chief Executive Officer will lead todays call also on the call if David Johnson.
Vice President and Chief Financial Officer prior to the question didn't answer session. All participants will be placed in the listen only mode. After the prepared remarks. The question didn't mean to fashion will begin.
Thank you asked the question doing on time. Please press Star then one number one on do you want telephone keypad. This call is being recorded no participation in high school students to I'm recording this call.
Do not agree to de term simply drop off the line I would now like to turn the call it will be Patricia Penman Johnson outdoors.
Please go ahead and.
Thank you good morning, and welcome to our discussion of Johnson outdoors. The school 2023rd quarter results. If you need a copy of today's news release. It is available on our website at Johnson outdoors Dotcom under Investor Relations I also need to remind you that this conference 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 be on Johnson outdoors control. These risks and uncertainties include those listed in our press releases and filings with the Securities and Exchange Commission. If you have any additional questions. Following the call. Please contact either Dave.
Johnson for me. It is now my pleasure to turn the call over to Helen Johnson Leipold.
Good morning, everyone. Thank you for joining us I'll begin by reviewing financial results for the quarter and year to date and discuss the current market dynamics in there and our brands performing I.
I will then outline key priorities going forward Benny turn things over today the share key financials and then we'll take your question.
Total company sales during the third quarter, where $138.4 million with operating profit up $12.9 million and net income up $12.9 million or $1.27 cents per diluted share.
On a year to date basis, net sales totaled $429.5 million with operating profit a $51.5 million and net income $39.7 million or $3.93 per diluted share for the fiscal nine month period.
Results for the quarter and nine month period, all compared favorably to the prior year, reflecting the impact of the pandemic on our markets and businesses.
Typically the fiscal third quarter is the primary selling season for warm weather outdoor recreation products. However, this is anything but a typical year.
Government ordered stay at home mandates in a temporary suspension of operations at some locations stifle sales in shipments in April in every business.
In May and June orders increased significantly in Beijing watercraft recreation camping at this time, we are working overtime to keep pace with continuing demand in all three of these businesses on the flipside travel restrictions continue to limit accessibility to diving, causing a sharp decline in that mark.
And overall.
As mandates ease and waterways and campground open up again, great outdoor is providing people exactly the kind of experience. They are eager for recreational activities that are reducing needing to the mine body in spirit unsafe to enjoy.
Our purpose to inspire more and more people to get out there and experienced the all the great outdoors is more important than ever and our employees dedicated to our mission to provide products that deliver a great outdoor experience has never been stronger.
Participation in fishing has always been high it's even higher now because I'm a water recreation affords people the space and tranquility. They want right now innovation is there like blending continues to play a key role in drawing both season to anglers and new anglers to Johnson outdoors for a great fishing experience.
A great example is the new old town sportsmen line of fishing kayaks in watercraft recreation fishing Kayak segment is one is one of the fastest growing in the panel market and we take an innovation to a whole new level. In this segment with this pioneering line power pedal and paddle fishing kayaks Haley to me.
<unk> unique wants and needs of every kind of angler, the sportsmen auto pilot, which utilizes a GPS enabled minn Kota trolling motor to propel steer and anchored the carrier with its unique spot block technology grab the coveted best in show award at the 2020 ICAST the world's most prestigious.
Fishing show.
This is mark Johnson outdoors third ICAST best in show on her in the past five years.
While the sportsmen line is generating a lot of excitement in the market and I feel great start the overall appeal of on the water recreation. This year is also giving a big lift to sales across our entire watercraft recreation portfolio and we're leveraging our growing capabilities in digital marketing and data analytics to maximize the fabric.
Finally, as a result, watercraft posted higher sales and profit during the third quarter, Despite coping 19 business interruption.
And fishing, we are continuing to build on a powerful legacy of innovation that transformed minn Kota and how many bird into the market leading brands they are today.
The new Magna Threesixty imaging from Humminbird is the first and only sonar technology that suites 125 feet around the boat, providing a full 360 degree view with unmatched detailed coverage.
Other sonar assumption only when the boat is moving our patented Threesixty technology suite continuously even when the boat is at a standstill Mega Threesixty has also enabled with our unique one vote network capability, which enhances the performance of both the mean chronic trolling motor and Humminbird fish finder.
To give anglers.
Effortless commands a bare boat shipments a mega Threesixty began early this year and are on track to be year, one expectations established prior to the pandemic.
Johnson outdoors fishing innovation captured two more awards at the 2020 I passed event for the new Humminbird coast mastered charging technology, which Nab best electronic for a nice win in this category in the past 10 years postmaster provides more information more detail gray.
It or clarity and customized bubble chart view to enable saltwater anglers to identifying navigate the most productive fishing spot.
And second the new Minn, Kota rafters shallow water anchor.
Each took best voting accessory honors two industry first technologies.
Auto bottom mode, which detects bottomed density to determine the right and bring forth and active anchoring which continuously managers anchoring fourth and adjust automatically for stable bottom appealing.
They can got off to a very strong start this year and since April sales. It continued to surge in virtually every category and channel. We're working hard to end the year as strong as we started.
Can't be markets have begun to rebound as more and more camp grounds in parks reopened both your recurring jetboil are benefiting from the heightened interest in camping of all sorts from backyard to back country cooking is an essential element of great camping experiencing jetboil the world's number one brand of cooking system is.
Poised for continued growth when camping markets fully recover.
In diving, our near term focus is on growing share in a down market and to better position SCUBAPRO for growth in the post pandemic global market recovery.
SCUBAPRO is the world's most trusted die brand and we will be there for divers once the market recovers.
Near term the biggest challenge we face is keeping pace with strong demand in watercraft fishing and camping as we continue to operate under strict procedures and protocol to keep our employee safe and to mitigate the spread of Kogas 19.
Going forward our goal is to maintain the positive momentum of our fishing watercraft recreation and can't Newell brands you. The ended the year by leveraging the increased interest in our outdoor activities to the fullest longer term, we remain committed to creating value by building by vibrant thriving businesses with the capability income.
Passed the need to deliver sustained profitable growth.
Now I'll turn the call over the Dave Johnson, our CFO to review the financial highlights Dave.
Thank you Alan as Helen said this is a typical year.
We came out to get strong with record high first quarter results poised for growth in every business and then one by one every business began to fill the impact from cobot 19.
At this time in prior years sales and production would be slowing down in anticipation of the season coming to an end.
But this year demand and three businesses remain high production is in full swing and if the weather cooperates customers are preparing for the season to have a longer tail.
While we're pulling out all the stopped in the year strong right now there too many unknowns to give us a clearer picture and how before your will shake out.
For the quarter gross margins remained strong at 45.2% equal to last year due to favorable product mix and lower tariff costs offsetting lower absorption, resulting from the lower volume.
Operating expense was down about $2 million in the quarter driven by a $5 million reduction in volume related expenses, and a 2 million to dollar decline in advertising and promotion spending.
Bad debt expense was up about $800000 due to a customer bankruptcy.
Deferred compensation expenses were up $2.1 million due to valuation adjustments and were 100% offset in other income.
R&D costs were also up $1.6 million due primarily to an acceleration of amortization of intangibles in the diving business.
On a fiscal year to date basis, our effective tax rate of 24.4% was comparable to last year.
We're keeping a very close eye on working capital in this challenging business environment, a year to date basis, working capital was up $4.2 million.
Decline in accounts payable more than offset a decrease in inventory.
And despite the business interruptions this quarter, we generated about $50 million in cash flow.
The fundamentals of our business are strong market, leading brands with outstanding innovation, along with a debt free balance sheet and healthy cash cash position all are critical to enabling us to work through the challenges ahead and emerge a stronger company better position for future success and continuing to drive value for shareholders.
I'm going to turn things over to the operator for today's session operator.
If you would like to asking question at this time simply press Star then the number one on your telephone keypad.
Draw your question press the pound the key.
Please.
Well, we compile the acuity roster.
Your first question comes from Anthony Lebiedzinski, what's been auto and company.
Yes, good morning, and thank you for taking my questions.
Just wanted to see if you guys can give me a give us better sense as to the magnitude or the timing shifts.
The shipments, especially fishing and camping.
Good to start with that.
Okay great.
Well.
You know given that pandemic and the fact that we shut down and a lot of the retailer shut down for some time frame.
It certainly has shifted because you know our our key month is usually April and.
So we can see that everything is shifted but you know predicting whether it's going to continue or how long that's kind of go it's really hard to say so.
All we can say is that right now demand is is very strong and we're working hard to keep up with it and and you know.
Obviously are.
It'd be great. If it continued and the season kept going longer than normal, but hard to predict at this time.
Yeah, I understand that certainly there's a lot of unknowns.
So as you're seeing this strong demand beginning in May just curious about the relationship between volume and pricing that you have seen.
Obviously, there's a great interest and people getting outdoors, but.
The economies.
Hi on unemployment. So just curious whether people are willing to trade up to more expensive products or the trading down I'm, just curious to get some color on that.
You know I think what we're seeing is in interest is so high in the outdoor is that across the board our consumers are buying our product and we haven't seen the impact of.
You know.
That as of now and the innovation, we have seems to be driving interest. So right now things are going.
As we would hope.
Okay.
As far as.
Any way for you guys to distinguish as far as the benefit from the stimulus checks as the government.
Obviously has been very active is trying to stimulate the economy.
Do you think thats been.
Much of a benefit or do you think your customer the end consumers really not affected by that.
Well, that's hard to say, but.
Certainly our demand is still there and they're still I think that the just desire to get outdoors has put us significant value on outdoor activity and.
You know they are willing to spend and certainly a stimulus check.
Contributes to that but knowing how much. It has is is really you know that's something we don't know.
Good.
And then.
No and as far as.
Good how should we think about the costs related to PTC.
Annotation products.
Whether as far as your productivity I know you guys are working overtime to keep up with the demand, but as far as your ability to maintain proper social distancing and so on is that an issue that we should think about.
Yeah.
We have a I mean, we've had some incremental costs due to cold, but it hasn't been material, but to your 0.2 or we were dealing with capacity basically with with social distancing and protocols were putting in place with our factories. So that's a bit of a challenge I think we are overcoming that each month.
And figuring it out.
So yeah, we want to see how that plays out going into next season, but right now as we said, we're just we're hoping to keep up with demand right now.
Got it right and then.
Your questions for me and then so as far as the bad debt expense.
Dave I think it was 800000 Uh huh.
Yes.
Yeah.
Do you foresee.
Do you foresee any anything else or did you accrue already kind of.
Ahead of.
What you think.
It was this an actual.
One of those in more of a project to kind of an accrual yeah. It was excellent at the actual bankruptcy.
With that a retailer.
We accrue to what we think as it is what we think is reasonable.
Having said that I think we'll have to see how this plays out with a retailer base.
And just kind of depends on how the economy goes I think everyone's kind of hanging in there right now we're in pretty good shape really with our retailers will obviously out plays out over the medium to long term.
Got it Okay and then what last question for me.
So the tax rate was a little bit life.
Versus.
Prior quarters, just wondering what that was and how should we think about the tax rate.
Yeah I mean.
It varies in the quarter pretty significantly but.
Thanks for the year to date, one is more of a fair comparison, which is comparable to last year. We took some some benefit from some tax positions. We had reserves so as we filed our.
Our our paper work this year, we were able to take some tax positions off the table, so, but I think year to date is probably more fair comparison.
Got it okay, well, thank you and best of luck.
Thank you thanks Anthony.
And as a reminder, if you would like to asking question simply star and the number one on your telephone keypad. Your next question is from well him with Manatuck Hill.
Good morning.
Thanks for taking my question.
It's just wondering drill down on the end market demand, you're seeing could you give us any color as to.
The retail sales or sell through that you're seeing.
Particularly in fishing camping and watercraft.
Well it.
What we can say is that.
We have significant demand and so.
Uh huh.
Our feeling is that the retailers are light on inventory because they've got orders and that we are.
Ah trying to keep up with so I think you know the sell through is is.
Pretty good and I think it's more that there's more demand then there is supply at this point.
Okay, but you can't providing specifics if we're talking like.
Oh.
20% or maybe can you give us essentially what kind of order growth that you're experienced maybe in June or here in July.
Well you know that's it.
All I can say is as demand is continuing in that so.
At this point, it's a good thing.
But through June it was.
Through the quarter it was.
Very good and.
Obviously, our projection starting the quarter were not been given what's going on so we're very feeling very good about.
The growth in demand, but we just got to keep up with it now.
Okay, we knew it seemed like.
Based on that demand in inventories being as low that's what we're hearing from retailers that.
You can experience if.
Yes.
Productivity is that the plants, what you would like.
Double digit growth in the fourth quarter, which Mike brings the year flat year over year on a revenue standpoint is that.
Yes, unreasonable to think about or is that reasonable.
Yeah.
Right now demand is strong so I mean, that's as far as we're going to go well on that I mean, I think we've just got to read the tea leaves.
Right Okay.
Okay.
I understand I mean that just.
I guess, a little bit more color as it relates to the current interest.
Just one last one then is.
[music].
Watercraft business, obviously was up 18%.
Which.
No you had some new products there.
But seemed a little bit less disrupted by.
The covance relative to fishing and.
Camping and hiking, so just talk a little bit about that difference in the performances.
Well I need a we've issued pretty we feel that there's a good demand across the board I think the difference with.
Fishing in the watercraft is that camping was a little delayed because of the parks were not open right away and so that.
Waterways were more open in accessible and I do think you know in our old town product launch.
At both was.
Certainly is watercraft and fishing, which was our sportsmen line and but also our base business was up as well. So I think it's just reflecting that you know people want to get.
Outside.
Fresh air what's acceptable whats easy a fishing watercraft, they're safe.
We've got automatic social distancing. So all those things you know we have going for us and I think camping you know it was just a function of when the campgrounds start opening up and people.
Can start getting out there so I.
I think you know the demand is good across the board, there's a little bit the differences, but I think fishing water camping backyard.
All those things are.
Oh, sorry activities people are looking to do so it's it's all good all healthy good stuff.
Thank you.
So the hearing or further questions at this time, we'd like to turn the call back over to me Helen Johnson Leopold for closing comments.
Well, thanks, everybody for joining us and stay safe and stay healthy.
There.
Yes.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].
[music].
[music].
Hello, everyone and welcome to the Johnson outdoors third quarter 2020 earnings Conference call, Helen Johnson, Leipold, Johnson outdoors, Chairman and Chief Executive Officer will lead todays call.
So on the call it David Johnson, Vice President and Chief Financial Officer. Prior to the question didn't answer your question all participants will be placed in a listen only mode. After the prepared remarks. The question any interest action will begin if he would like to ask a question during that time. Please press Star then amendment.
One on your telephone keypad. This call is being recorded your participation in high school student, who I will recording this call. If you do not agree to these time simply drop off the line I would now like to turn the call over to Patricia Penman Johnson outdoors. Please go ahead and.
Thank you good morning, welcome to our discussion of Johnson outdoors, the school 2023rd quarter results.
If you need a copy of today's news release. It is available on our website at Johnson outdoors dotcom under Investor Relations.
I also need to remind you that this conference 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 money be on Johnson outdoors control. These risks and uncertainties, including those listed in our press releases and filings with the Securities and Exchange Commission. If you have any additional questions. Following the call. Please contact either.
Johnson or me. It is now my pleasure to turn the call over to Helen Johnson Leipold.
Good morning, everyone. Thank you for joining us I'll begin by revealing financial results for the quarter any year to date and discuss the current market dynamics and their effect on our brands performance.
I will then outline key priorities going forward, Benny turn things over to Dave share Chief Financial and then we'll take your question.
Total company sales during the third quarter were $138.4 million with operating profit up $12.9 million and net income up $12.9 million or $1.27 cents per diluted share.
On a year to date basis, net sales totaled $429.5 million with operating profit of $51.5 million and net income $39.7 million or $3.93 per diluted share for the fiscal nine month period.
Results for the quarter and nine month period, all compared favorably to the prior year, reflecting the impact of the pandemic on our markets and businesses.
Typically the fiscal third quarter is the primary selling season for warm weather outdoor recreational products. However, this is anything but a typical year.
Government ordered stay at home mandates in a temporary suspension of operations at some locations stifled sales in shipments in April in every business.
In May and June orders increased significantly in fishing watercraft recreation and camping at this time, we are working overtime to keep pace with continuing demand in all three of these businesses on the flipside travel restrictions continue to limit accessibility to diving, causing a sharp decline in that mark.
But overall.
His mandate to ease and waterways and campground open up again, a great outdoor is providing people exactly the kind of experience very eager for recreational activities at a reduced relating to the mine body in spirit and save to enjoy.
Our purpose to inspire more and more people to get out there and experience. The all the great outdoors is more important than ever and our employees dedicated to our mission to provide products that deliver a great outdoor experience has never been stronger.
Participation in fishing has always been high it's even higher now because I'm a water recreation fourth people the basin tranquility. They won't break out innovation is there like blending continues to play a key role in trying both season to anglers and new angler, two Johnson outdoors for a great fishing experience.
A great example is the new old town sportsmen line of fishing kayaks in watercraft recreation.
Hi Tech segment is one isn't one of the fastest growing in the panel market and we've taken innovation to a whole new level. In this segment with this pioneering line power pedal and paddle fishing kayaks tailored to meet unique wants and ease of every kind of angler.
It's been an auto pilot, which utilizes a GPS enabled minn Kota trolling motor to propel Dear and anchored the kayak with its unique spot block technology grab the coveted best in show award at the 2020 ICAST the world's most prestigious crushing show.
This is mark Johnson outdoors third ICAST best in show on or in the past five years.
While the sportsmen line is generating a lot of excitement in the market and I feel great start the overall appeal of on the water recreation. This year is also giving a big lift to sales across our entire watercraft recreation portfolio and we're leveraging our growing capabilities in digital marketing and data analytics to maximize its effort.
As a result, watercraft posted higher sales and profit during third quarter, Despite kopec 19 business interruption.
In fishing, we are continuing to build on a powerful legacy of innovation that transformed minn, Kota and hummingbird into the market leading brands they are today.
The new Magna Threesixty imaging from Heidelberg is the first and only sonar technology that sweep the 125 feet around the boat, providing a full 360 degree view with unmatched detailed coverage.
Other sonar assumption only when the boat is moving our patented Threesixty technology suite continuously even when the boat is at a standstill Mega Threesixty is also enabled with our unique wonderful network capability, which enhances the performance in both the main chronic trolling motor and Humminbird. This binder.
And giving up effortless command bareboat shipments of Mega Threesixty began early this year and are on track to be year, one expectations established prior to the pandemic.
Johnson outdoors fishing innovation captured two more awards at the 2020 I pass you back from the New Humminbird Coast me after charging technology, which Nab best electronics for a nice win in this category in the past 10 years postmaster provides more information more detail gray.
There's clarity in customized bubble chart view to enable saltwater English to identify and navigate most productive fishing spot.
And second the new Minnkota Raptor shallow water anchor, which took back loading accessory honors two industries first technologies.
Auto bottom mode, which detects bottom density to determine the right and bring forth and active anchoring which continuously monitors anchoring force and adjust automatically for stable bottom of.
Okay got off to a very strong start this year and since April sales continued to surge in virtually every category and channel. We're working hard to end the year as strong as we started.
Camping markets have begun to rebound as more and more camp grounds and parks reopened both your recurring jetboil are benefiting from the heightened interest in capping of all sorts from backyard cut back country.
Looking is an essential element of great camping experience in Jeff oil the World number one brand of clinical systems is poised for continued growth when camping markets fully recover.
In diving, our near term focus is on growing share and that down market and to better position SCUBAPRO for growth in the post pandemic global market recovery.
SCUBAPRO is the world's most trusted guide brand and we will be there for divers once the market recovers.
Near term the biggest challenge we face is keeping pace with strong demand in watercraft fishing and camping as we continue to operate under strict procedures and protocol to keep our employee safe and to mitigate the spread of cope with 19.
Going forward our goal is to maintain the positive momentum of our fishing watercraft recreation and dampening brands you. The ended the year by leveraging the increased interest in our outdoor activities to the fullest longer term, we remain committed to creating value by building by vibrant thriving businesses with the capability.
Past the to deliver sustained profitable growth.
Now I'll turn the call over to Dave Johnson, our CFO to review the financial highlights Dave.
Thank you Alan as Helen said this isn't a typical year.
We came out a good strong with record high first quarter results poised for growth in every business and then one by one every business began to fill the impact from cobot 19.
At this time in prior years sales and production would be slowing down in anticipation of the season coming to an end.
But this year demand and three businesses remain high production is in full swing in at the weather cooperates customers are preparing for the season to have a longer tail.
While we're pulling out all the stops to end the year strong right now there too many unknowns to give us a clearer picture and how before your will shake out.
For the quarter gross margins remained strong at 45.2% equal to last year due to favorable product mix and lower tariff costs offsetting lower absorption, resulting from the lower volume.
Operating expense was down about $2 million in the quarter, driven by a $5 million reduction in volume related expenses, and a $2 million decline in advertising and promotion spending.
Bad debt expense was up about $800000 due to a customer bankruptcy.
Deferred compensation expenses were up $2.1 million due to valuation adjustments and were 100% offset in other income.
R&D costs were also up $1.6 million due primarily to an acceleration of amortization of intangibles in the diving business.
On a fiscal year to date basis, our effective tax rate of 24.4% was comparable to last year.
We're keeping a very close eye on working capital in this challenging business environment, a year to date basis, working capital was up $4.2 million.
The decline in accounts payable more than offset a decrease in inventory.
And despite the business interruptions this quarter, we generated about $50 million in cash flow.
The fundamentals of our business are strong market, leading brands with outstanding innovation, along with a debt free balance sheet and healthy cash cash position all are critical to enabling us to work through the challenges ahead and emerge a stronger company better position for future success and continuing to drive value for shareholders.
Downward turn things over to the operator for today's session operator.
Thank you would like to ask a question at this time simply press Star then the number one on your telephone keypad.
Withdraw your question press the pound the key.
Please.
Well, we compile the Q1 day roster.
Your first question comes from Anthony Lebiedzinski with Sidoti and company.
Yes, good morning, and thank you for taking the questions.
So just wanted to see if you guys can give me give us better sense as to the magnitude or the timing shifts.
For shipments specially fishing and camping.
We could just start with that.
Okay great.
Well.
Given that pandemic in the fact that we shut down and a lot of the retailer shutdown for coming timeframe.
It certainly has shifted because.
Our key month is usually April.
And.
So we can see that everything is shifted but.
Predicting whether it's going to continue or how long that's kind of go it's really hard to say fell.
We can say is that right now demand is is very strong and we're working hard to keep up with it and and.
Obviously our.
It'd be great. If it continued and the season kept going longer than normal, but hard to predict at this time.
Sure, Yes, I understand that certainly there's a lot of unknowns.
Cobot.
So as you're seeing the strong demand beginning in May just curious about the relationship between volume and pricing that you have seen.
Obviously, there is a great interest in people getting outdoors, but.
With the economy.
High unemployment. So just curious whether people are willing to trade up to more expensive products or the trading down I'm, just curious to get some color on that.
I think what we're seeing is an interest to sell high in the outdoor that.
Across the board our consumers are buying our product and we havent seen any impact.
No.
As of now and the innovation, we have seems to be driving interest so.
Right now things are going.
As we would hope.
Okay. Okay.
As far as.
Any any way for you guys to distinguish as far as the benefit from the stimulus checks that the government.
Obviously has been very active and this is trying to stimulate the economy.
[music].
Do you think thats been.
Much of a benefit or do you think you your customer to the end consumers really not affected by that.
Well, that's hard to say, but.
Certainly our demand is still there and there is still I think that.
The.
Desire to get outdoors has put adds significant value on outdoor activity and.
You know they are willing to spend and certainly a stimulus Jack.
Contributes to that but knowing how much. It has is is really.
Thats something we don't know.
Understood and then.
And as far as.
Cobas, how should we think about the costs related to PTC or sanitation products.
Whether as far as your productivity I know you guys are working overtime to keep up with the demand, but as far as your ability to maintain proper social distancing itself.
That's an issue that we should think about.
Yes.
I mean, we've had some incremental costs due to covance it hasn't been material, but to your point too.
We are dealing with capacity basically with with social distancing and protocols were putting in place with our factories. So that's a bit of a challenge I think we are overcoming that each month.
And figuring it out.
So yes, we want to see how that plays out going into next season, but right now as we said, we're just we're helping to keep up with demand right now.
Got it right and then.
Two more questions for me and then so as far as the bad debt expense.
Dave I think it was 800.
Thats correct.
Yes.
Okay.
Do you foresee.
You foresee any anything else or is it the did you accrued already kind of.
Ahead of.
Would you think that was this an actual.
One other though is more of a project to kind of an accrual yes. It was excellent at the actual bankruptcy.
With that retailer.
You know, we accrue to what we think as it is what we think is reasonable.
Having said that I think we'll have to see how this plays out with.
Retailer base.
And just kind of depends on how the economy goes I think everyone is kind of hanging in there right now were pretty good shape really with our retailers go out to see out plays out over the medium to long term.
Got it Okay and then what last question for me.
So the tax rate was a little bit light.
Versus.
Prior quarters, just wondering what that was and how should we think about the tax rate.
Yeah I mean.
It varies in the quarter pretty significantly but.
Thanks, the year to date, one is more of a fair comparison, which is comparable to last year. We took some some benefit from some tax positions. We had reserves. So as we filed our our our paper work. This year, we were able to take some tax positions off the table, so but I think year to date is probably more fair comparison.
Got it okay, all right well, thank you and best of luck.
Thank you thanks Anthony.
And as a reminder, if you would like to asking question simply quick star and the number one on your telephone keypad.
Your next question is from will Hamilton with Manatuck Hill.
Good morning.
Thanks for taking my question.
It's just wondering is a drill down on the end market demand, you're seeing could you give us any color as to.
The retail sales or sell through that you're seeing.
Particularly in fishing camping and watercraft.
Well.
What we can say is that.
We have significant demand and so.
Okay.
Our feeling is that the retailers are light on inventory because they've got orders and that we are.
Trying to keep up with so I think the sell through is is.
Pretty good and I think it's more that there's more demand and supply at this point.
Okay, but you can't providing specifics if we're talking right.
Okay.
20% or maybe can you give us essentially what kind of order growth that you're experienced maybe in June or here in July.
Well.
Thats.
Hi, all I can say is as demand is continuing and that's it.
Disappointing, it's a good thing.
But through June it was.
During the quarter it was.
Very good and.
Obviously, our projection starting the quarter, we're not giving up what's going on so we're very feeling very good about.
The growth in demand, but.
We just got to keep up with it now.
Okay, we knew it seemed like.
Based on that demand in inventories being as low that's what we're hearing from retailers that.
You could experience if.
So the productivity is that the plants, what you would like.
Double digit growth in the fourth quarter, which Mike brings the year flat year over year on a revenue standpoint is that.
Yes, unreasonable to think about or is that reasonable.
I mean.
Right now demand is strong so I mean, that's as far as we're going to go well on that I mean, I think we've just got to read the tea leaves.
Right Okay.
Okay.
Hi, I understand I mean that just.
Hi, good us a little bit more color as it relates to the current interest.
Just one last one then is.
[music].
Watercraft business, obviously was up 18%.
Which.
No you had some new products there.
But seemed a little bit less disrupted by.
The covance relative to fishing and.
Camping and hiking. So can you just talked little bit about that difference in the performances.
Well.
We have issue, but we feel that there's good demand across the board I think the difference with.
The fishing in the watercraft is that camping was a little delayed because of the parks were not open.
Right away and so that.
Waterways, where more open an accessible and I do think.
Our old town product launch.
Both was.
Certainly its watercraft and fishing, which was our sportsmen line and but also our AR.
Based business was up as well so I think it's just reflecting that people want to get.
Outside fresh share what's acceptable whats easy.
Fishing watercraft, they're safe.
Got automatic social distancing, so all those things.
We have going for us and I think camping was just a function of when the can start opening up and people.
Can start getting out there so.
I think you know that demand is good across the board base, a little bit the differences, but I think fishing water camping backyard.
All those things are.
All right activities people are looking to do so it's it's all good all healthy good stuff.
Thank you.
So here are no further questions at this time, we'd like to turn the call back over to Nick Helen Johnson Leopold for closing comments.
Well, thanks, everybody for joining us and stay safe and stay healthy.
Care.
Yes.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.