Q4 2021 Johnson Outdoors Inc Earnings Call
Yeah.
Okay.
Hello, everyone and welcome to the Johnson outdoors fourth quarter 2021 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 be placed in a listen only mode. After prepared remarks, the question and answer session will begin.
If you would like to ask a question. During this time keep her start in there number one on your telephone keypad.
Call is being recorded your participation in Plas are sent to our recording this call.
If you do not agree to these terms simply drop off the line.
I'll now turn the call over to Patricia Penman Johnson outdoors.
Please go ahead independent.
Thank you good morning, everyone. Thank you for joining us for our discussion of Johnson outdoors results for the 2021 fiscal fourth quarter.
If you need a copy of today's news release. It is available at our website at Johnson outdoors Dot 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.
These risks and uncertainties include those listed in our press release and filings with the security and Exchange Commission. If you have any questions. Following the call. Please contact Dave Johnson or me. It is now my pleasure to turn the call over to Helen Johnson Leipold.
Thanks, Matt Good morning, and thank you for joining us I'll begin with an overview on the quarter and year to date results and then I'll share our perspective on our performance and outlook for our businesses David will review financial highlights and then we'll take your questions.
In fiscal 2020, one total company revenues grew 26% to $752 million profit surged, 57% to $111 million and net income was $83 million or $8 in 'twenty, one cents per diluted share a 61% improvement from.
The prior fiscal year.
We have an exceptional year, our fishing camping and watercraft recreation businesses saw strong sales throughout the year and our guiding business began to recover in the third and fourth quarters. During our fiscal fourth quarter total company net sales were $166 million, which was an increase versus last year's strong quarter.
Overall as People's desire to spend time outdoors, continuing to fuel demand. Our performance. This year reflects the value of our sustained focus and investment in translating deep rich consumer insight and the innovative products that deliver the best outdoor experience possible.
Fishing, our largest business robust demand across all product lines continued throughout the year. The English looked at Johnson outdoors for Beth Beth fishing experience as possible.
Members brand our most recent innovation the award winning Mega lives imaging to live as the clarity and detail our Mega imaging in live action, allowing owners to see fish and structure in real time, even watching fish and screen as they move into fights and anglers more with the release of Mega lives English have access to the most complete.
Package of industry, leading technologies and products offered in our one boat network platform, which enables our hummingbird emanate coated product to work.
To work together in unison, giving England and effortless command of their boat.
For some English fishing is an all weather sport and how many where he is also a leader in ice fishing technology. The award winning Mega Light imaging also launched in helix nine this year, joining our popular Mega 360 imaging technology Mega lives imaging give ice anglers the ability to eat fish moving below the ice in real time and real.
Each of the war and Mega 360 allows ice anglers to quickly understand what structure into under the I used to make them more easily locate productive fishing hole, you mean Codie award winning Raptor shallow water anchor continues to do well in its first full year on the market. The Raptor has two industry, leading first technologies auto body.
Mode, which detects about I'm going to need to determine the right anchor in sports and active angry which continuously monitors ain't reinforced to me just automatically for stable bottom opinion, any trolling motors with a strong heritage of innovation quality and durability me coda is the industry leader.
Watercraft recreation, our fishing kayak segment continues to grow and we outpaced the strong market with the ongoing enthusiasm for our innovative sports in line that we launched last year, both retailers and consumers are enthusiastic about the innovation and our sportsmen auto pilot went through 36 Motors motor ice fishing Guy was reached.
Paddling magazine's best fishing boat for 2022 old town sportsmen autopilot 136 leverage into the game changing spot lock technology from its sister brand, new Kona to hold position, while English fish from the award winning autopilot motorized fishing card to the personal Pebbled power.
Sports many adult PK extra sports spin behind offers a watercraft for anglers in any type of water.
Camping cooking continues to be an integral part of camping experience demand for our Eureka camp cooking technology continues to beat expectations, and then Jeff Boyle consumers continuing to be excited about her super like stash stope that we launched earlier this year, reducing weight on the trail is critical for backpackers and the statutes the lightest all of them.
One backpacking doses like hemp oil the technology leader in portable outdoor cooking systems, and Denver me I mean their dining rooms.
Starting to see markets begin to recover from the pandemic related restrictions in the latter half of the fiscal year guidance.
Diving into strong fiscal fourth quarter.
Our work to promote and support local guiding as well as enhance our global digital presence and strength in E. Commerce are all working to help is positive growth. We remain focused on these efforts along with sustained innovation to ensure <unk> position as the most trusted brand in the world.
Yeah.
So all the ongoing global supply chain environment remains challenging and unpredictable we have taken the time to understand opportunities and have invested in capacity and additional tools to help us manage our supply chain. We remain focused on continuing to work hard to manage supply chain issues and fill orders.
In summary, we had an exceptional year, which wouldn't have been possible without the hard work and dedication of our employees, who work tirelessly to meet the incredible demand for our product as we continue to navigate the challenges ahead, our company purpose, which is to inspire people to get out there to experience and value the great outdoors.
For generations to come continues to guide everything we do and we remain committed to investing in our key strategic drivers.
Understanding our consumer sustaining innovation leadership, identifying new sources, and paths and broken or market and continually optimizing our digital consumer experience our ongoing hard work on these priorities ensures that our portfolio of market, leading brands is well positioned for success and that we continued to deliver.
A profitable long term growth for Johnson outdoors, now I'll turn the call over to Dave for a review of the financial highlights. Thank.
Thank you Hal and good morning, everyone.
I want to highlight a few items from the quarter and the year as Helen mentioned, we had continued strong demand in three of our core businesses through fiscal 2021.
Like the challenging supply environment that many companies are operating in we're facing ongoing disruptions in our supply chain that must be managed on a daily basis, we've taken action to mitigate our supply chain challenges, including finding alternative sources and doing everything possible to secure inventory in raw components to fill demand.
Total inventory levels are higher than last year by 71% and raw material inventory is up by 100%.
In addition, we've invested in adding capacity and incremental resources where appropriate.
Despite higher raw material and freight costs gross margins only slightly due to volume efficiencies and favorable product mix.
Now in the near term, we expect gross margins to be pressured due to the supply chain issues and we're taking appropriate mitigation actions.
Operating expenses were $28 $9 million higher versus the prior year due to largely volume related expenses as well as increased head count and people costs, but.
It declined as a percentage of sales versus fiscal 2020.
Net income for the year was $83 $4 million up 51% from the prior fiscal quarter.
Active tax rate was 26, 2% compared to last year's rate of 25, 1%.
Next year, we expect the tax rate to be in the mid twenties.
Looking ahead demand remains healthy and we're focused on managing ongoing supply chain pressures, including maintaining higher than normal inventory levels to meet demand.
Our strong balance sheet and healthy cash position continues to enable us to invest in strategic opportunities to strengthen the business while.
While consistently paying dividends to our shareholders.
Now I will turn the call back over to the operator for the Q&A session operator.
Thank you.
Ladies and gentlemen, if you like to ask a question. Please press Star then one on your Touchstone telephone one moment. Please.
Our first question comes from Anthony <unk> from Sidoti Your line is open.
Yes, good morning, and thank you for taking the questions. So.
Yeah first I just wanted to follow up.
David you mentioned that the current.
The demand outlook is healthy up are you seeing that across the board in all your categories or is this one because you go categories stand out versus others.
Yeah.
Yeah I'll take that question Yeah, we are.
Definitely seeing you know.
Strong demand still across the board I would say would be <unk>.
He is the one that is is a little less consistent but we see positive upward movement in that business, but.
As far as we can now in you know we have.
We certainly have our shipment data, but we get a limited amount.
Amount of point of purchase data, but as far as we can tell the demand is still very healthy across the other three businesses and growing in diving.
Got it Okay, and then there's a diving is that.
Perhaps because of the the new variant for Covid or was that something else you think.
No I well I think we are still on.
The aftermath of Covid in general would shut down travel and we're a very you know that's a very travel sensitive visits but we got.
Programs going for local diving and we are.
Launching some new products as well, which tend to help us gain some volume and break through some of the negative pressure, that's resulting from COVID-19. So.
We feel good that we will continue to see some rebound in that business.
Okay. That's that's great to hear and then.
Which segments should we expect to see the most margin pressure.
Again is it kind of across the board or is this one category kind of stand out.
Or you think you'll see it.
The margins more so than the others.
You know I would say it's across the board I mean, where we are importing.
Product tends to have more pressure, but we tend to kind of do that across the board. So we're importing of electronic components.
We are sourcing some finished good product from Asia those tend to have the most pressure on them, but that's.
A long answer, but I think it's pretty much across the board.
Got it okay.
Have you done any price increases or do you plan to do price increases to offset some of these headwinds.
Yeah, I mean, we're looking at everything and we yes, we have taken price increases to help offset.
It's a pretty dynamic environment. So we continue to evaluate that and we won't be afraid to take appropriate actions where necessary.
Got it Okay, and then do you have a sense as to what the.
Inventory levels are at retail.
You know I E.
You know it.
Continues to be an inventory level because you know the demand is is.
Is significantly higher than it has been historically so we've got you know.
Still a lot of room to grow in the pipeline.
Got it okay that's great.
Great to hear and then lastly, just looks like.
Quick housekeeping question here so.
You mentioned the tax rate will be in the mid twenties should that.
Very much throughout the year or kind of more or less we think there'll be consistent.
Second part to the housekeeping question is just what you expect for Capex for fiscal 'twenty two.
Yeah for the tax rate I mean, it's hard to say quarter by quarter, just because the profitability very so much seasonally usually.
So.
That's a difficult one to answer but.
Mid Twenty's, there's probably a fair bet on that.
For Capex.
We ended this year of about 21 change in Capex I would expect that to increase next year as we add capacity.
It could be up 3% to 40% versus this year.
Okay got it all right well, thank you very much and best of luck.
Thanks Neely.
Thank you again, if he would like to ask a question. Please press Star then one when you touched on the telephone.
One moment please.
Again to ask a question. Please press Star then one.
Yeah.
I'm showing no further questions at this time I'd like to turn the call back over to Helen Johnson Leipold for any closing remarks.
Okay well.
Thanks, everyone for joining us and I hope you have a great holiday season.
Thank you.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.
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Hello, everyone and welcome to the Johnson outdoors fourth quarter 2021 earnings conference call.
The 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.
Well I'll answer the question of every person all participants have been placed in a listen only mode.
The prepared remarks, the question and answer special will be get if he would like to ask a question during that time to press Star then the number one on your telephone keypad.
Call is being recorded your participation in class is sent to a recording of the call if.
If you do not agree to these simply drop off the line.
I'll now turn the call over to Patricia Penman Johnson outdoors.
Please go ahead.
Thank you good morning, everyone. Thank you for joining us for our discussion of Johnson outdoors results for the 2021 fiscal fourth quarter.
If you need a copy of today's news release. It is available at our website at Johnson outdoors Dot 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 security and Exchange Commission. If you have any questions. Following the call. Please contact Dave Johnson or me.
It is now my pleasure to turn the call over to Helen Johnson Leipold.
Thanks, Matt Good morning, and thank you for joining us I'll begin with an overview on the quarter and year to date results and then I'll share our perspective on the performance and outlook for our businesses David will review financial highlights and then we'll take your questions.
In fiscal 2021 total company revenue grew 26%.
$752 million profit surged, 57% to $111 million and net income was $83 million or $8 21 per diluted share up 51% improvement from the prior fiscal year.
We have an exceptional year, our fishing camping and watercraft recreation businesses saw strong sales throughout the year and our diving business began to recover in the third and fourth quarters. During our fiscal fourth quarter total company net sales were $166 million, which was an increase versus last year's strong quarter.
Overall as People's desire to spend time outdoors, continuing to fuel demand. Our performance. This year reflects the value of our sustained focus and investment in translating deep rich consumer insights and the innovative products that deliver the best outdoor experience possible in fishing, our largest business robust demand across all product lines.
Continued throughout the year as the English looked at Johnson outdoors for Beth Beth fishing experience as possible.
<unk> brand our most recent innovation the award winning Mega light imaging delivered for clarity and detail our Mega imaging in live action, allowing all of us to see fish and structure in real time, even watching fish items.
Screen as they move into bite and anguish, nor with the release of Mega lives anguish and access to the most complete package of industry, leading technologies and products offered in our one boat network platform, which enables our hummingbird and zinc coated products to work.
To work together in unison getting anglers, an effortless command of their boat.
So mainly fishing is an all weather sport and hummingbird is also a leader in ice fishing Technology Award winning Mega lives imaging also launched in <unk>.
Nine this year, joining our popular Mega 360 imaging technology Mega life imaging ice and what is the ability to see fish moving below the ice and real timing and reacting to the Lord and Mega 360 allows ice anglers to quickly understand what structure is under the ice. So they can more easily locate productive fishing hole you mean code.
The award winning Raptor shallow water anchor continues to do well in its first full year on the market. The Raptor has two industry, leading first technologies autopilot mode, which detects patent doesn't need to determine the right anchor enforced and active angry which continuously monitors anchoring Fortunately just automatically for stable.
Bottom opinion, any trolling motors with a strong heritage of innovation quality and durability may coda is the industry leader.
In watercraft recreation fishing kayak segment continues to grow and we outpaced the strong market with the ongoing enthusiasm for our innovative sports in line that we launched last year, both retailers and consumers are enthusiastic about the innovation and our sportsmen autopilot one through 36 Moger motorized fishing Guy was reached.
Awarded Paddling magazine's best fishing boat for 2022.
Old town sportsmen, autopilot 136 leverage into the game changing spot lock technology from its sister brand new Kona to hold position will anglers fish from the award winning autopilot motorized fishing card to the worst of the pedal powered sports Exalt D. K, Yes sportsmen line offers a watercraft for anglers.
Any type of water.
In camping cooking continues to be an integral part of camping experience demand for our Eureka camp cooking technology continues to beat expectations, and then Jeff Boyle consumers continuing to be excited about our Super light stash stope that we launched earlier this year, reducing weight on the trail is critical for backpackers and the statutes the lightest.
All we went backpacking doses like Jeff loyalty technology leader in portable outdoor cooking systems as Denver May finally in our diving business. We started to see markets begin to recover from the pandemic related restrictions in the latter half of the fiscal year.
Having a strong fiscal fourth quarter.
Our work to promote and support local guiding as well as enhance our global digital presence and strength in E. Commerce are all working to help its positive growth. We remain focused on these efforts along with sustained innovation to ensure <unk> position as the most trusted brand in the world.
Yeah.
While the ongoing global supply chain environment remains challenging and unpredictable we have taken the time to understand opportunities and have invested in capacity and additional tools to help us manage our supply chain. We remain focused on continuing to work hard to manage supply chain issues and fill orders.
In summary, we had an exceptional year, which wouldn't have been possible without the hard work and dedication of our employees, who worked tirelessly to meet the incredible demand for our product as we continue to navigate the challenges ahead, our company purpose, which is to inspire people to get out there to experience and value of the great outdoors.
Generations to come.
Can use to guide everything we do and we remain committed to investing in our key strategic drivers.
Understanding our consumer sustaining innovation leadership, and identifying new sources and paths of growth in our markets and continually optimizing our digital consumer experience.
Our ongoing hard work on these priorities ensures that our portfolio of market, leading brands is well positioned for success and that we continue to deliver sustained profitable long term growth for Johnson outdoors now I will turn the call over to Dave for a review of the financial highlights.
Thank you Helen and good morning, everyone.
I want to highlight a few items from the quarter and the year as Helen mentioned, we had continued strong demand in three of our core businesses through fiscal 2021.
Like the challenging supply environment that many companies are operating in we're facing ongoing disruptions in our supply chain that must be managed on a daily basis, we've taken actions and mitigate our supply chain challenges, including finding alternative sources and doing everything possible to secure inventory in raw components to fill demand.
Yes.
Total inventory levels are higher than last year by 71% and raw material inventory is up by 100%.
In addition, we've invested in adding capacity and incremental resources where appropriate.
Despite higher raw material and freight costs gross margins only dipped slightly due to volume efficiencies and favorable product mix.
Now in the near term, we expect gross margins to be pressured due to the supply chain issues and we are taking appropriate mitigation actions.
Operating.
Expenses were $28 $9 million higher versus the prior year due to largely volume related expenses as well as increased head count and people costs, but it's a.
Declined as a percentage of sales versus fiscal 2020.
Net income for the year was $83 $4 million up 51% from the prior fiscal quarter the.
The effective tax rate was 26, 2% compared to last year's rate of 25, 1%.
Next year, we expect the tax rate to be in the mid twenties.
Looking ahead demand remains healthy and we're focused on managing ongoing supply chain pressures, including maintaining higher than normal inventory levels to meet demand.
Our strong balance sheet and healthy cash position continues to enable us to invest in strategic opportunities to strengthen the business, while consistently paying dividends to our shareholders.
Now I will turn the call back over to the operator for Q&A session operator.
Thank you.
Ladies and gentlemen, if you like to ask a question. Please press Star then one on you touched on the telephone one moment. Please.
Our first question comes from Anthony <unk> from Sidoti Your line is open.
Yes, good morning, and thank you for taking the questions.
First I just wanted to follow up.
Dave you mentioned that the current.
Demand outlook is healthy are you seeing that across the board in all your categories.
Or is this one I think you go category standout versus others.
I'll take that question.
Definitely seeing.
Strong demand still across the board I would say would be diving is the one that is is a little less consistent but we see positive upward movement in that business, but.
As far as we can tell.
No we haven't.
We certainly have our shipment data, but we get limited.
Amount of point of purchase data, but as far as we can tell the demand is still very healthy across the other three businesses and growing in value.
Got it Okay, and then just diving is that perhaps because of the new variant for COVID-19 or is that something else we planned.
No well I think we are still.
The aftermath of Covid in general would shutdown travel and we're a very that's a very travel sensitive business, but we've got.
Programs going for local diving and we are.
Launching some new products as well.
Tend to help us gain some volume and breakthrough some of the negative pressure at lids, resulting from Covid.
We feel good that we will continue to see some rebound in that business.
Okay, that's great to hear and then.
Which segments should we expect to see the most margin pressure.
Again is it kind of across the board or is this one category cutoff standout.
You think youll see.
Margins more so than the others.
I would say it's across the board I mean, where we are importing.
Product tends to have more pressure, but we tend to kind of do that across the board. So we're importing electronic components.
Were sourcing some finished good product from Asia those tend to have the most pressure on them, but thats.
A long answer, but I think it's pretty much across the board.
Got it okay.
And.
Have you done any price increases or do you plan to do price increases to offset some of these headwinds.
Yeah, I mean, we're looking at everything and we yes, we have taken price increases to help offset.
It's a pretty dynamic environment. So we continue to evaluate that and we won't be afraid to continue to take appropriate actions where necessary.
Got it Okay, and then do you have a sense as to what the.
Inventory levels are at retail.
Yeah.
Yeah.
We.
It continues to be.
Tori level because the demand is.
Is significantly higher than it has been historically so we have got.
Still a lot of room to grow in pipeline.
Got it okay.
Great to hear and then lastly, just a quick.
Quick housekeeping question here so.
I know you mentioned the tax rate will be in the mid twenties.
Should that.
Very much throughout the year or kind of more or less we think it will be consistent.
Second part to the housekeeping question is just what you expect for Capex for fiscal 'twenty two.
Yeah for the tax rate I mean.
It's hard to say quarter by quarter, just because the profitability very so much seasonally usually.
So.
It's a difficult one to answer but.
Mid Twenty's, there's probably a fair bet on that.
For Capex.
Yes. We ended this year of about 21 change in Capex I would expect that to increase next year as we add capacity.
It could be up.
3% to 40% versus this year.
Okay got it all right well, thank you very much and best of luck.
Thanks Neely.
Thank you again, if you would like to ask a question from plus five in one when you touched on the telephone.
One moment please.
Again to ask a question. Please press Star then one.
Yes.
I'm showing no further questions at this time I'd like to turn the call back over to Helen Johnson Leipold for any closing remarks.
Okay, well, thanks, everyone for joining us and hope you have a great holiday season. Thank you.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.