Net sales up nearly 15 percent for Johnson Outdoors

RACINE, Wis. – Net sales, operating profits and earnings were all up for manufacturing giant Johnson Outdoors Inc. (Nasdaq: JOUT) during the second quarter ended April 2, the company reported in a press release this morning.

But the company said profit sagged in its Diving segment (down 2.9 percent versus the prior year) and its Watercraft segment posted an operating loss for the third consecutive reporting period (-$2.1 million).

Total net sales for the second quarter were $95.6 million, a 14.8-percent increase over the same quarter last year, due to significant revenue gains in the Motors and Outdoor Equipment segments, Johnson said.

New product performance and channel growth across all sectors drove increased sales in Motors, while Military sales grew 54.3 percent versus the same period last year, resulting in the reported gains in Outdoor Equipment. Operating profit for the quarter grew 41.8 percent compared with the prior year ($8.7 million versus $6.1 million respectively) driven by double-digit profit growth in Motors (75.0 percent) and Outdoor Equipment (46.5 percent), according to the company.

Net income in the second quarter was $4.8 million (earnings per diluted share of $0.55) compared with $4.3 million (earnings per diluted share of $0.50) in the prior year period, Johnson said.

Diving segment sinks in soft market

The company reported that its Diving segment benefited from favorable currency exchange, which added to a modest sales increase, and minimized the slide in profitability.

“Diving is struggling with a soft market where the pace of recovery is uncertain; and, investments in Watercraft have yet to benefit the bottom-line,” said Helen Johnson-Leipold, the company’s chairman and CEO. “Portfolio diversity is a key asset, and more focus is needed to ensure greater consistency and balance in profitability across our businesses.”

Johnson-Leipold said the best indicator of market health is consumer response, and she said that the third quarter consumer retail season would provide a “clear picture” of whether or not the company has turned consumer insight into winning products.

Year-to-date income up

Total net sales for the first six months of 2004 were $158.5 million, up 14.7 percent versus the same period 2003. Operating profit was $10.0 million, a 59.5-percent increase over the same six-months last year. Net income year to date was $5.0 million (earnings per diluted share of $0.57) compared with $4.0 million (earnings per diluted share of $0.47) in the prior period.

The company reported debt-to-total-capital of 30.3 percent, up 6 percentage points from the year before. The increase in accounts receivable ($9.1 million) was the result of higher sales and a favorable currency impact of $2.5 million. The build in working capital and inventory levels was consistent with the period leading into the company’s third fiscal quarter peak selling season. Gross profit grew in large part due to successful new product introductions and efficiency improvements.

“On the balance sheet, things remain positive,” said Paul Lehmann, vice president and CFO. “Working capital has peaked, so cash balances should begin to build over the remainder of the year, and our debt ratio has dropped to the lowest level in our history.”

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