Q3 2025 Johnson Outdoors Inc Earnings Call

Morning and thank you for joining.

Hello everyone.

And welcome to the Johnson Outdoors third quarter 2025 earnings conference call.

Today's call will be led by Helen Johnson, Leupold, 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 the listen-only mode. After the prepared remarks. The question and answer session will begin if you would like to ask a question during that time, please press the star and then the number is 1. 1 on your telephone keypad, this call is being recorded.

Your participation implies consent to our recording this call. If you do not agree to these terms, simply drop off the line.

I would now like to turn the call over to Patricia Penman from Johnson Outdoors. Please, go ahead, Miss Penman.

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.

Actually, 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 for myself. It is now my pleasure to turn the call over to Helen Johnson. Leah, hold.

sales in our third fiscal quarter ending June 2025 increased 5% to 180.7 million dollars compared to 172.5 million in the prior year, third quarter,

Operating profit was up significantly to 7.3 million versus an operating loss. In the previous third quarter, while the marketplace continued to fluctuate, our positive, positive results. This quarter reinforced. The critical importance of our focus and investment in Market leading Innovation to continue growth and success of Our Brands.

In our fishing business, demand for hummingbird's new fish finder. Technology megalive 2 sonar and our new Explorer fish finder unit has been exceeding expectations. I'm excited to announce that a few weeks ago, our Explorer series captured best in electronics. Honors at iaf, the world's most prestigious fishing show

Also boating magazine. Recently awarded our main Kota brand, the Marine power Innovation. Ward for our Riptide. Instinct brushless trolling motor.

We're excited by the response to our innovation in this business and we will continue to invest in being an innovation leader to drive future growth.

In our camping and watercraft business, both our Old Town and Jeff Oil brands remain strong leaders in their markets. Orders for Jeff Oil's newest fast boil cooking systems, which feature lightning-fast boil times and fuel efficiency, continue to outpace expectations.

And while the waterproof marketplace is still weak and the industry struggles, Oldtown remains resilient and continues to build on its industry-leading innovation.

Results in our diving business were slightly improved amid. Stronger market conditions, during the third quarter. However the Dotty Marketplace remains challenged with uncertainties in the global economy and consumer travel and we continue to work well to

To be well positioned in diving for the future, we continue our integration work with the long-term supplier we purchased at the beginning of this fiscal year, and we are confident it will deliver the benefits we plan for.

We are also focused on finding ways to drive more operational efficiencies across the business.

Overall, we are pleased with our positive third quarter results and the success of our Innovation at the same time, Global macroeconomic challenges, continue to drive uncertainties in the marketplace. We can continue to invest and execute on our strategic priorities Innovation, operational, efficiencies, and e-commerce. And our resiliency, as a company, is further, bolstered by our debt-free balance sheet and cash position. We are confident, these are the right things to position us for future healthy profitable growth.

Now, I'll turn the call over to Dave for more details on the financials.

Thank you Helen. Good morning, everyone.

Profit before income taxes in the third quarter was up significantly due to an increase in sales.

Gross margin improvements in a reduction in operating expenses versus the prior year.

Gross margin in the third quarter was 37.6% up 1.8 points from last year's quarter.

Overhead absorption from higher volumes. Improved pricing and cost savings efforts, drove. The improvements offset by a modest impact from tariffs.

Operating expenses decreased $1.7 million versus the prior year in the third quarter.

And excluding the $2 million increase from the Deferred Compensation Plan. Valuation expenses are down 3.7 million.

Lower promotion and professional services expenses contributed to the decline.

Last year's third quarter and down from our fiscal year-end.

Regarding tariffs, while the current environment remains dynamic, we've made progress on our mitigation strategies. We'll continue to adjust as the tariff situation evolves and we gain more clarity.

Our cost Savings Program remains critical in this environment, and we're committed to driving optimal product costs and enhance operating efficiency across the company.

Again, I'll reiterate that our balance sheet remains debt free and we have a solid cash position.

Remain competent in our ability and plans to create long-term value for our shareholders. Now, I'll turn the call over to the operator for the Q&A session.

Thank you. As a reminder, to ask a question, please press *1, then 1 on your telephone and wait for your name to be announced to withdraw your question. Please press *1 again. Please stand by while we compile the Q&A roster.

And we have a question from Anthony Lieberzinsky of Sedoti. Your line is open.

Good morning and thank you for taking the questions. Uh certainly nice to see the improved sales and much better profitability in the quarter. Um so as you alluded to it's been a certainly, a dynamic environment to to say the least. Uh can you comment on on the Cadence of sales that you saw throughout the quarter as you went from April through June? And can you give us maybe some early read uh or color as to how the

Month of July was.

Well certainly uh, as we look at the, the quarter every month we saw Improvement uh, in our uh sales. Uh, so it was a positive trend

um, you know, it's a little early to talk about, uh,

the final quarter. But, you know, it is towards the end of the season and we are hoping to end

In a good spot. Um,

you know, looking forward to more stability.

Certainly for next season. But, um, it is good to see some positive results.

Absolutely. Okay. All right, and then, um, I know Dave, you touched on the the impact of tariffs. This sounds like it was a modest impact, uh, in the quarter. Um, so, you know, as we look to update our models, you know, how should we think about the impact of tariffs going forward, um, just curious to get your thoughts on that.

Yeah, I mean, I do expect more costs coming in in the fourth quarter. So, you know, we're forecasting that to, you know, see the tariffs kind of flow through our inventories and get out and be expensed.

Um, you know, beyond that, I mean as you know, as everybody knows it's things are changing on a daily weekly basis. So we're ready to mitigate these these tariffs. Um as we head into next season uh and we've made and like I said, we've made really good progress on the supply chain side of things and we'll continue to look at other alternatives to to mitigate that.

Right? Uh so you know and so I guess 1 of the ways you can mitigate that is through pricing actions. Can you comment on on on that which you've done and any potential things that you may want to do?

Yeah, we have taken pricing on certain product lines in our portfolio. We'll continue to look at that going forward, you know, kind of across the portfolio, you know, keeping in mind.

You know, the consumer dynamics that we're that we're looking at competitive situation Etc but that that will definitely be something. We'll look at

Mhm. Got it. Okay, and then um,

You. You've got guys have been uh certainly working on your cost Savings Program for a while to be more efficient, you know, in terms of how you operate the business, uh, can you give us an update on that? You know, like what what was done in the quarter and kind of what's more to come? Uh, as you look to, you know, get into your fiscal 26 year. Uh and and a couple of months

Yeah, I mean the Cost Savings Program is robust. We, you know, last year had a ton of factory efficiencies that we recognized, and we continue that work this year.

Um, and we are focused on product cost improvements and that that'll take a little bit of time to to manifest. But we, we're very excited about the portfolio of initiatives that we've got in the pipeline.

Type of a, you know, reduced, uh, promotional activity going forward.

Well, I think, you know,

Mostly are in very.

Markets, and we, um, put programs together to reflect.

What we need to do, I think, um, you know, the fourth quarter is normally not, uh, a high court, or for us, from a seasonal standpoint. But, you know, if you're referring to, you know, as we move forward, we, we were always have to consider promotions as a tactic.

Uh, depending on what's going on in the market.

Right. Okay. And then, um,

you know, as far as, you know, the recent awards that you've received, um, I know the at the icast show we did get a, a best in electronics award shows. So, thinking about that, I mean, have you seen, you know, because of that have you seen an an uptick further uptick in demand because of that, it's just wondering how to how to think about that and how that could translate into a sales for you guys.

Well, it certainly is our target audience, that pays attention to the I cast and getting recognition for. Um, the Explorer, uh, fish finder unit. Was it just adds to the momentum so we were very, uh, happy about that. Um, but it, it it

Definitely got it off to a very good start.

That's good to hear. All right, and then, yeah, I guess my, my last question here is, you know, you've done a nice job, reducing inventory. Uh, do you think you can, uh, further reduce inventory in the next couple of quarters here?

We are.

We're working on that for sure. I think there's more Improvement to be had. Um, we've made really good progress.

Um, we feel good about kind of our ability to put process in place to really manage that, uh, the caveat is just, you know, the, the macroeconomic environment. The tariffs that that, of course will add costs are inventory, Etc. But you know, we feel good about where we are right now, but we know we got more progress to make.

Mhm. Understood. Well, thank you very much and best of luck.

Thank you. Thank you. I'm showing no further questions at this time. I'd like to turn it back to Helen Johnson. Leave hold for closing remarks.

Just want to thank all of you for joining us today. Uh, and everybody have a nice day. Thank you.

this concludes today's conference call, thank you for participating and you may now disconnect