Earnings call transcript: Johnson Outdoors Q2 2025 misses earnings forecast

Johnson Outdoors (JOUT) reported its second-quarter earnings for fiscal year 2025, revealing a significant miss on earnings per share (EPS) compared to analyst forecasts. The company posted an EPS of $0.22, falling short of the expected $0.66. Revenue also came in below expectations at $168.35 million, compared to a forecast of $178.27 million. Despite the earnings miss, Johnson Outdoors’ stock saw a modest increase of 1.39% in pre-market trading. According to InvestingPro analysis, the stock appears undervalued, with a market capitalization of $245 million and a price-to-book ratio of 0.56.

Key Takeaways

• Johnson Outdoors’ Q2 FY2025 EPS was $0.22, missing the forecast of $0.66.
• Revenue for the quarter was $168.35 million, below the expected $178.27 million.
• The company’s stock rose by 1.39% in pre-market trading despite the earnings miss.
• Key product launches included new technologies from Humminbird and Jetboil.
• The company maintained a debt-free balance sheet with reduced operating expenses.

Company Performance

Johnson Outdoors experienced a challenging second quarter, with sales declining approximately 4% year-over-year. Despite the revenue drop, the company improved its gross margin to 35% and reduced operating expenses by $7.7 million. The firm also decreased its inventory by $69 million, maintaining a solid cash position and a debt-free balance sheet. InvestingPro data reveals the company holds more cash than debt and maintains a strong current ratio of 4.23, indicating robust liquidity. The outdoor recreation market remains tough, with cautious trade sentiment affecting consumer confidence.

Financial Highlights

• Revenue: $168.35 million, down from the forecasted $178.27 million.
• Earnings per share: $0.22, below the expected $0.66.
• Gross margin: 35%, a slight increase from the previous year.
• Operating expenses: Reduced by $7.7 million.
• Inventory: Reduced by $69 million to $180 million.

Earnings vs. Forecast

Johnson Outdoors reported an EPS of $0.22, significantly below the forecast of $0.66, representing a miss of approximately 67%. Revenue also fell short, coming in at $168.35 million against the projected $178.27 million. This marks a notable deviation from expectations, impacting investor sentiment.

Market Reaction

Despite the earnings miss, Johnson Outdoors’ stock price increased by 1.39% in pre-market trading. This movement suggests that investors may be focusing on the company’s strategic initiatives and product launches rather than immediate financial results. The stock’s performance remains within its 52-week range, with a high of $43.13 and a low of $21.33. InvestingPro highlights that JOUT has maintained dividend payments for 13 consecutive years, currently offering a significant 5.56% dividend yield. The stock has experienced a notable decline of 41.87% over the past year, potentially presenting a value opportunity for investors seeking dividend income.

Outlook & Guidance

Looking ahead, Johnson Outdoors plans to continue investing in innovation and exploring potential pricing adjustments. The company is focusing on high-value consumer products and monitoring the tariff environment. Future EPS and revenue forecasts suggest a challenging year, with potential improvements expected by FY2026. InvestingPro analysis indicates the company faces profitability challenges, with analysts not anticipating profitability this year. For deeper insights into JOUT’s financial health and growth prospects, investors can access comprehensive Pro Research Reports available on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

Executive Commentary

CEO Helen Johnson Leopold emphasized the company’s commitment to innovation, stating, "Innovation breaks through a tough market." CFO Dave Johnson highlighted the firm’s U.S.-based manufacturing as a competitive advantage, adding, "We remain confident in our ability and plans to create long-term value for shareholders."

Risks and Challenges

• Economic uncertainties impacting the diving business.
• Consumer confidence challenges in seasonal markets.
• Potential tariff impacts due to exposure to Chinese electronic components.
• Ongoing supply chain optimization needs.
• Global economic conditions affecting retail environments.

Q&A

During the earnings call, analysts inquired about the company’s new product pipeline and the impact of tariffs on operations. Executives reassured stakeholders of minimal retailer pullback from tariff announcements and highlighted ongoing efforts to manage supply chain challenges effectively.

Full transcript - Johnson Outdoors Inc (JOUT) Q2 2025:

Conference Operator, Johnson Outdoors: Hello, everyone, and welcome to the Johnson Outdoors Second Quarter twenty twenty five Earnings Conference Call. Today’s call will be led by Helen Johnson Leopold, 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 the prepared remarks, the question and answer session will begin.

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 Pat Penman from Johnson Outdoors. Please go ahead, Ms.

Penman.

Pat Penman, Investor Relations, Johnson Outdoors: Thank you. Good morning, and thank you for joining us for our discussion of Johnson Outdoors’ results for the twenty twenty five fiscal second quarter. If you need a copy of today’s news release, it is available on our website at johnsonoutdoors.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 Securities and Exchange Commission. If you have any questions following the call, please contact Dave Johnson or myself. It is now my pleasure to turn

Helen Johnson Leopold, Chairman and Chief Executive Officer, Johnson Outdoors: the call over to Helen Johnson Leopold. Good morning, everyone. Thank you for joining us. I’ll begin by sharing perspective on our second quarter performance as well as an update on the strategic priorities for our businesses. Dave will review the financial highlights, and then we’ll take your questions.

Our second quarter results reflect continued market challenges and a cautious retail and trade environment. Despite these results, there are pockets of good news with inroads we are making on our strategic priorities and the necessary changes we have been making for future growth. We saw positive results from new products in our fishing and camping businesses, highlighting the critical importance of our ongoing investment in innovation. In Fishing, our Humminbird brand launched new technology in the first quarter, Megalive two and Explore. In our second quarter, we started shipping those products and demand has been exceeding expectations.

We are excited about this momentum as we continue to work hard to give anglers the best fishing experiences possible. That includes tournament fishing experiences. We’re thrilled that Easton, Father Gil, Minn Kota and Hummingbird sponsored Pro Bass Angler using our equipment with the champion of this year’s prestigious Bassmaster Classic tournament. In our Camping and Watercraft business, our Jetboil brand launched the next level of fastboil systems with features building on the lightning fastboil times and fuel efficiencies that the brand is known for. There is enthusiasm among both retailers and consumers for these new products, and orders are outpacing expectations.

Our Old brand continues to be a strong leader in a very depressed market. During the second quarter, Old Town launched five new watercraft additions. This significant launch, which extends our popular Sportsman line as well as gets us into new recreational categories, was our ocean line. These new additions are equipped with pedal or electric propulsion aimed at giving the best experience as possible on the water for recreational enthusiasts and avid anglers. And I’m excited to share another win from this year’s Bassmaster Classic, Old Town sponsored kayak angler Wyatt Hammon won the tournament using a Sportsman Autopilot kayak equipped with both the Minkoto motor and Hummingbird Megalive technology.

Our diving business continues to face challenging marketplace, very impacted by global economic uncertainties and consumer travel, and we continue to look for ways to drive more operational efficiencies in that business. As I shared last quarter, we have purchased a company that has been a longtime supplier for our ScubaPro brand and is both the catalyst for future ScubaPro innovation and a vertical integration that gives us more efficiency and allows us to accelerate our efforts in simplifying this business. Finally, regarding tariffs. They will impact our business despite the fact that we are an American company with U. S.

Based manufacturing and operations. Although the current environment remains dynamic, we are focused on multiple strategies to mitigate the potential impact on our business. That includes adjusting our supply chain strategy, looking for operational efficiencies and considering potential adjustments to our pricing strategy. We are also prioritizing our efforts to focus on products that have the most value for our consumers. While tariff situation continues to evolve and while we get more clarity, we will identify additional solutions that address the changing environment.

As we navigate current and future challenges, our debt free balance sheet and cash position will help us remain resilient, and we will continue to invest and execute on our strategic priorities, innovation, operational efficiency and e commerce. We are confident these are the right things profitable growth. Now I’ll turn the call over to Dave for more details on the financials.

Dave Johnson, Vice President and Chief Financial Officer, Johnson Outdoors: Thank you, Hal, and good morning, everyone. Gross margin in the second quarter was 35%, up slightly from last year’s quarter. Our cost savings efforts have helped shore up our gross margin despite continued pricing discounting in the marketplace. Operating expenses decreased $7,700,000 versus the prior year second quarter. And excluding the $3,400,000 decrease from the deferred compensation plan valuation, expenses are down $4,300,000 Lower volume related expenses and decreased promotion expenses contributed to that decline.

Inventory levels continue to show good progress. Our inventory balance as of March was $180,000,000 down about $69,000,000 from last year’s second quarter and was down from our fiscal year end. We’ll remain diligent in managing our inventories given the uncertain macro environment. Our cost savings program remains critical in this environment, and we’re committed to driving optimal product costs and enhancing operating efficiency across the company. Finally, want to reiterate what Helen said.

Our balance sheet remains debt free, we have a solid cash position, both of which provide a competitive advantage in uncertain times. We remain confident in our ability and plans to create long term value for shareholders. Now I’ll turn the call over to the operator for the Q and A session.

Conference Operator, Johnson Outdoors: Thank you. And our first question comes from Anthony Lebiedzinski of Sidoti. Your line is open.

Anthony Lebiedzinski, Analyst, Sidoti: Thank you, and good morning, everyone. And yes, thanks for taking the questions. It’s really great to see the progress with the inventory reductions and great to hear also about the success of the new products. So I guess, first, how does the pipeline look like for new products without you guys sharing too much of the secret sauce? But just wondering how do we think about the new product introductions in the upcoming quarters?

Helen Johnson Leopold, Chairman and Chief Executive Officer, Johnson Outdoors: Well, we launched for this season, and we have launched the new products for both fishing and camping. And so far, they’re beating expectations. So we feel good about that. Watercraft has also launched a significant line of new products, which we are hoping to see those results be positive as well. So we keep pushing on innovation, and that’s one of our strategic priorities.

Right now, we’re working on the longer term innovation that will hopefully continue into next year’s hope. We’ve always said innovation breaks through a tough market. So that’s always a priority for us.

Anthony Lebiedzinski, Analyst, Sidoti: Understood. Okay, thank you. So given what’s happening here in the world as far as just dealing with tariffs and consumer confidence kind of where it is, just understanding that you guys have a seasonal business. But just wondering if you guys could talk about the trends during the quarter, whether there was big changes from January to March. And like maybe if you look at it on a year over year basis, know for the quarter, your sales were down about what, 4%.

But did you just I’m wondering if there was significant changes, variability on a year over year basis as you progress through the quarter given what’s happening

Helen Johnson Leopold, Chairman and Chief Executive Officer, Johnson Outdoors: Dave, can pipe in too. But I would say it’s been pretty consistent of a a tough environment, and it’s both from the consumer sentiment and from the retailer hesitation. Can you hear me, Anthony? Yes. I’m trying

Anthony Lebiedzinski, Analyst, Sidoti: I can hear you. Hello?

Conference Operator, Johnson Outdoors: Again, please remain on the line. Your conference will resume shortly.

Anthony Lebiedzinski, Analyst, Sidoti: Can anybody hear me?

Conference Operator, Johnson Outdoors: Yes. They’re going to reconnect.

Anthony Lebiedzinski, Analyst, Sidoti: Okay.

Conference Operator, Johnson Outdoors: Please stand by.

Anthony Lebiedzinski, Analyst, Sidoti: Thank you.

Conference Operator, Johnson Outdoors: And I see that you’ve rejoined.

Pat Penman, Investor Relations, Johnson Outdoors: Hello? Yep. We’re here. You may proceed.

Helen Johnson Leopold, Chairman and Chief Executive Officer, Johnson Outdoors: Sorry, Anthony. I think we had a little technical problem. But your question was on trends this year versus what we’ve seen versus last year. All I can say, it’s still from a market standpoint, it’s tough. But we do have new products that we are launching that we didn’t have last year.

So again, we’re hoping that those will deliver some positive results during the rest of the season.

Anthony Lebiedzinski, Analyst, Sidoti: Understood. Okay, yeah. Thanks, Helen. Okay, and then just wondering, so since the new tariffs were announced on April 2, obviously, there’s been some back and forth, some changes. Just wondering if you’ve seen any notable change since then in terms of your ordering patterns from retailers.

What’s been the response? Curious to get your at least high level thoughts on that.

Dave Johnson, Vice President and Chief Financial Officer, Johnson Outdoors: Yeah. I mean, it’s still early for us in terms of retailer reaction, I would say. I mean, we came in with the quarter with a good plan in place. And I think the reaction will be the rest of the year. So we haven’t seen initially a big pullback from retailers.

But as Helen alluded to, I think the marketplace is going to be challenged for the balance of the season.

Anthony Lebiedzinski, Analyst, Sidoti: Thanks, Dave. And then so just thinking about the impact of tariffs, just maybe first, if you could address how much you guys have exposure to China, which is getting hit the hardest in terms of the tariff rates. And then, to just how do we think about the response from you whether I know you guys talked about potential pricing actions. So sounds like those have not yet been implemented. But just maybe walk us through your China and other countries’ exposure, just rough estimates.

And then how do you respond to that? And, you know, just would love to hear your thoughts on that.

Dave Johnson, Vice President and Chief Financial Officer, Johnson Outdoors: Sure. I mean, as you know, we we manufacture and assemble almost all of our products in The United States Mhmm. Which is great. I mean, I would it’s it’s we’re very proud of that. But we do import, a fair amount of product from China, electronic components and other raw materials from China and Southeast Asia.

So we do have exposure. I mean, real. It’s there. So we are now working. We’ve been working a few months on mitigation strategies, and we talked about that already.

So, you know, everything’s on the table for us. We’re looking at supply chain, you know, getting more efficiencies, pricing where it makes sense. You know, everything’s on the table for us to mitigate it, and we’re very, very focused on that.

Anthony Lebiedzinski, Analyst, Sidoti: Thanks, Dave. Okay. And then just following up as far as the quarter that you reported. So part of the gross margin puts and takes were the I guess, on the negative side of discounting, on the positive side of the cost savings program. So can you provide any more details as to how much you suffer from those things?

You know, the just just wanted to understand the magnitude of that as especially this cost savings program and whether, you know, there’s still more to be realized from the cost savings, as we look towards, you know, the key summer months here?

Dave Johnson, Vice President and Chief Financial Officer, Johnson Outdoors: Yeah. I think I said before that we were looking at cost savings between one and two points benefit for us as we as we came into this year. And that’s consistent with the quarter. Okay. So and that helped offset some some discounting that we we did in in the quarter kind of across the board there.

So that’s kind of the magnitude we’re looking at. And then importantly, we’re looking at expanding that cost savings. So that’s it’s a critical piece of what we’re trying to do going forward.

Anthony Lebiedzinski, Analyst, Sidoti: Mhmm. Gotcha. Okay. So so do you think it could be more than that one to two points of gross margin when when you’re done with this cost savings program?

Dave Johnson, Vice President and Chief Financial Officer, Johnson Outdoors: Well, the savings program is gonna it’s it’s a medium term and longer term, you know, program. So I I can’t give you any guidance more than what I’ve already said. But, yeah, we we hope to get more.

Anthony Lebiedzinski, Analyst, Sidoti: Understood. Okay. Okay. And and then lastly for me, you know, it looks like the the the tax rate in the quarter was unusually high. Can you comment on what happened there, and, what is your outlook for the fiscal year?

Dave Johnson, Vice President and Chief Financial Officer, Johnson Outdoors: Yeah. I mean, there’s a couple of things happening. One is, you know, we’ve got income and expense in different jurisdictions. And with when you you kinda get down to a smaller number, the the rate kinda looks wonky. But we also had an accrual from some tax audits in Europe that we we took in the quarter that affected that quarterly tax rate.

So that’s kind of a one time one off thing. You know? It’s given what’s happening with with everything in the macro environment, I you know, I even hesitate to tell you what’s what the full year is gonna look like. But, you know, we’re we’ll be managing pretty carefully.

Anthony Lebiedzinski, Analyst, Sidoti: Understood. Okay. Well, thank you very much, and best of luck dealing with the crazy world here.

Dave Johnson, Vice President and Chief Financial Officer, Johnson Outdoors: Thanks, Anthony.

Helen Johnson Leopold, Chairman and Chief Executive Officer, Johnson Outdoors: Thank you.

Conference Operator, Johnson Outdoors: Thank you. I’m showing no further questions at this time. I’d like to turn it back to Helen Johnson Leopold for closing remarks.

Helen Johnson Leopold, Chairman and Chief Executive Officer, Johnson Outdoors: Thank you for joining us today, and I hope everyone has a very good day. Thank you.

Conference Operator, Johnson Outdoors: This concludes today’s conference call. Thank you for participating, and you may now disconnect.

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