RACINE, Wis. – Outdoor recreation company Johnson Outdoors Inc. (Nasdaq:JOUT – News), experienced higher earnings on lower net sales for its third fiscal quarter ended July 3, it reported in a recent statement.
Total net sales for the quarter were $114.9 million compared to $141.2 million in the prior year period. Income from continuing operations of $9.0 million, or $0.98 per diluted share, compared favorably to income from continuing operations of $7.9 million, or $0.85 per diluted share, in the same quarter last year due to cost savings and tax benefits, which offset the negative impact of declining sales on profitability, according to the company.
“We have made significant progress in reducing costs and improving efficiency, while protecting our leadership positions in a very challenging marketplace. Importantly, long-term restructuring initiatives are transforming the way we do business to ensure more resilient operations and stronger, more competitive businesses which we believe will be better positioned to deliver sustained profitable growth and enhanced shareholder value in the future,” said Helen Johnson-Leipold, Chairman and Chief Executive Officer.
Third quarter sales historically reflect customer inventory replenishment due to consumer demand during the primary retail selling period for the company’s warm-weather seasonal outdoor products, it explained. Total net sales declined 18.6 percent compared to the prior year quarter, due largely to economic conditions in key markets. Key factors behind the results, according to the company, were:
Total company operating profit of $10.6 million for the third fiscal quarter compared unfavorably to operating profit of $14.6 million in the prior year quarter.
The company reported income from continuing operations of $9.0 million, or $0.98 per diluted share, during the third fiscal quarter, compared to income from continuing operations of $7.9 million, or $0.85 per diluted share, in the same quarter last year. State income tax credits related to recent expansion of Humminbird operations in Alabama added $1.4 million to net income for the current year quarter, according to the company. A deferred tax valuation allowance benefit of $2.2 million also favorably impacted net income this quarter. Interest expense for the third quarter increased $1.0 million over the prior year quarter due to non-cash accounting charges related to an interest rate swap.
In June 2009, the company announced it was consolidating all domestic Watercraft production and business and customer support services in Old Town, Maine and closing its Ferndale, Washington facility as part of an initiative to significantly reduce cost and complexity, optimize synergies and assets, strengthen competitiveness and improve profitability for the future. Consolidation is anticipated to result in annual cost-savings of more than $4 million going forward, according to the company. Costs and charges associated with the action are estimated to have a negative impact on earnings per diluted share of between $0.16 and $0.20 in the fourth fiscal quarter of 2009.
Net sales in the first nine months of fiscal 2009 were $291.2 million versus $339.0 million in the same nine-month period last year, a decrease of 14 percent. Total Company operating profit was $11.2 million during the first nine months of fiscal 2009 compared to operating profit of $13.6 million during the prior year-to-date period. Income from continuing operations for the first nine months of the year was $4.5 million, or $0.49 per diluted share, versus income of $5.0 million, or $0.55 per diluted share, in the first nine months of the prior year.
The company’s debt level was $60.8 million at the end of the third quarter versus $70.0 million at the end of the prior year quarter, and debt, net of cash, was $26.9 million at the end of the current quarter versus $47.7 million at the end of the previous year quarter, Johnson Outdoors reported. Depreciation and amortization was $8.0 million year-to-date, compared to $7.4 million during the first nine months of the prior year. Capital spending totaled $5.2 million during the first nine months of fiscal 2009 compared with $8.4 million in same period in 2008.
“Strict inventory management and production planning processes, along with disciplined cash management and spending controls throughout the year have helped drive cost and inefficiency out of the operations, improve our profitability profile overall and strengthen the balance sheet,” said David W. Johnson, vice president and CFO.