JOUT Q2 2026 Earnings Transcript

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DATE

Friday, May 8, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Helen P. Johnson-Leipold
• Chief Financial Officer and Vice President — David W. Johnson

TAKEAWAYS

• Revenue Growth -- Revenue increased 15.5% from the prior-year second quarter, with all segments contributing.
• Gross Margin -- Gross margin reached 38.8%, a 3.8-point improvement over the prior-year period.
• Year-to-Date Net Sales -- Net sales for the first six months rose 21.5%, driven by volume and segment-wide gains.
• Operating Income -- Operating income and profitability increased versus the prior-year quarter due to higher sales volume and continued cost-savings initiatives.
• Segment Performance -- Fishing saw notable demand for new Humminbird Explorer Series and MEGA Live 2 products, as well as strength in Minn Kota trolling motors and pricing action.
• E-Commerce Initiatives -- Growth in Camping and Watercraft segments was attributed in part to expanded e-commerce and digital engagement, with a new Jetboil TrailCook product launch cited.
• Diving Segment -- The Diving business benefited from improving global market conditions and expanded e-commerce sales, supporting a solid sales increase.
• Inventory -- Inventory ended at $186.9 million, up $6.8 million from the previous year’s second quarter to prepare for the upcoming selling season.
• Operating Expense -- Operating expense was $11.2 million higher year over year, primarily from sales-volume-related costs and increased variable compensation.
• Profit Before Tax -- Profit before tax was $10.2 million, up from $4.2 million for the comparable prior-year quarter, reflecting profitability improvements.
• Balance Sheet -- The company remains debt-free and continues to pay a regular dividend, with the most recent declared in February.

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RISKS

• David W. Johnson said, "We are seeing cost pressure going forward. Like many companies, electronic industry component costs are dynamic for us, and that is something we have our eye on and are monitoring. That could be a bit of a headwind over the coming quarters."
• Operating expense increases were driven partly by higher sales volumes and variable compensation, but also included unspecified health care and consulting costs.
• Uncertainty around tax rate persists, with David W. Johnson stating, "Because we have the valuation allowance on the U.S. income right now, the tax rate will be up and down depending on the mix of profits we see in the quarter and what we are forecasting for the full year."
• Helen P. Johnson-Leipold stated, "Consumers are a little cautious with all the things going on, but innovation is the catalyst to get things moving. We are hoping this is the beginning of an upward trend, but it is going to be challenging, and innovation will be the key going forward."

SUMMARY

Management credited retail improvement and product innovation for delivering double-digit revenue and net sales growth, while highlighting notable gross margin expansion from operational initiatives. The company emphasized enhanced e-commerce capabilities and digital engagement as material supporting factors, especially in Camping and Watercraft, alongside new product launches and global expansion in Diving. Management affirmed continued debt-free operations and commitment to its dividend policy, while outlining a measured approach to inventory buildup for the anticipated seasonal cycle. Executives cited elevated variable compensation and volume-related costs as primary drivers for increased operating expenses, and indicated that efficiency gains may materialize as recent investments mature.

• The company has been operating in a true digital mode for only about a year, with management describing e-commerce as an initiative with "a hard core press" to broaden reach.
• David W. Johnson highlighted that "Most of the improvement was operating—so fixed-cost absorption," while cost savings also contributed to gross margin gains.
• The tax rate remains unpredictable due to the existing valuation allowance, and management projects $4 million to $5 million in tax expense for the full year, subject to quarterly profit mix changes.
• There was no reported direct impact from recent increases in gas prices or geopolitical developments according to point-of-sale data, but management continues to evaluate potential economic and inflationary headwinds.

INDUSTRY GLOSSARY

• Gross Margin: Percentage of sales revenue remaining after deducting cost of goods sold, representing the profitability of core operations before operating expenses.
• Operating Income: Earnings from core business activities before interest and taxes, used to assess operational profitability.
• Valuation Allowance: An accounting provision reducing deferred tax assets, reflecting uncertainty about future taxable income sufficient to use those assets.

Full Conference Call Transcript

Helen P. Johnson-Leipold: Thanks, Allison. Good morning, everyone. I will begin by sharing perspective on our second quarter and year-to-date results as well as give an update on each business. David will review the financial highlights, and then we will take your questions. Improved retail conditions and ongoing success of our product innovation helped drive 15.5% revenue growth in the second quarter, with all business segments contributing to the improvement. Operating income for the second quarter was much improved versus the prior-year second quarter due to increased sales volume, and our cost-savings initiatives continued to boost profitability as well.

Year to date, our net sales are 21.5% higher than last year’s fiscal six-month period, with operating income and gross margin also up for the fiscal year-to-date period. We are pleased with our second quarter and year-to-date results and are particularly proud of our market-leading brands, which continue to resonate with consumers and reinforce our leadership position across our portfolio. Our Fishing business delivered strong results in the second quarter, driven by improved trade conditions, continued robust demand for Humminbird’s Explorer Series and MEGA Live 2 fish finders, and Minn Kota’s full lineup of trolling motors, as well as pricing action. These factors combined to reinforce our momentum and position in the marketplace.

We remain focused on investing in innovation to deliver fishing technology that sets the standard for anglers worldwide. In Camping and Watercraft, growth during the quarter was supported by our expanding digital and e-commerce capabilities, with Old Town and Jetboil maintaining their leadership position in competitive categories. During the quarter, Jetboil also launched TrailCook, a new innovation designed to expand the brand beyond boiling water into broader backcountry cooking. In both brands, we will continue to build on our strengths to drive sustained growth through innovation and deep engagement with outdoor enthusiasts. Lastly, in our Diving business, improved conditions across the global markets and continued growth in e-commerce helped drive a solid increase in second quarter sales.

Digital engagement continues to play an increasingly important role, enhancing connectivity between our SCUBAPRO brand, retail partners, and consumers. As we continue to lean into digital channels and strengthen our global footprint, we are optimistic about SCUBAPRO’s ability to grow and further reinforce its position in the market. Overall, we are pleased with the quarter and year-to-date results. By investing in and executing our strategic priorities—consumer-driven innovation, digital and e-commerce excellence, and operational efficiencies—we are strengthening our market position and taking the right steps to navigate macroeconomic uncertainty while building long term. Now I will turn the call over to David for more detail on the financials.

David W. Johnson: Thank you, Helen. Good morning, everyone. Our strategic cost-savings program remains critical and continues to deliver meaningful benefits to our bottom line. Gross margin for the second quarter improved to 38.8%, up 3.8 points from the prior-year quarter. Overhead absorption from higher volumes and cost savings were the main drivers of the improvement in gross margin. Year to date, gross margin is 37.9%, up 4.9 points from the prior year-to-date period. Operating expense increased 11.2 million from the prior-year second quarter, due primarily to increased sales-volume-related costs as well as increased variable compensation costs.

Profit before income taxes for the second quarter was 10.2 million compared to 4.2 million in the previous-year quarter, driven mostly by the improvement in operating income. As we prepare for the upcoming selling season, we modestly increased inventory levels. Our inventory balance at the end of the second quarter was 186.9 million, up about 6.8 million from the previous year’s second quarter. Our balance sheet remains debt-free, and we continue to pay a meaningful dividend to shareholders, with the Board approving our most recent dividend announced in February.

Looking ahead, despite ongoing economic uncertainties, we remain firmly focused on financial discipline and actively managing the business to balance near-term pressures while continuing to invest in priorities that support sustainable growth. Now I will turn the call over to the operator for the Q&A session.

Operator: Thank you, ladies and gentlemen. If your question has been answered and you wish to remove yourself from the queue, please press 11 again. One moment for our first question. Our first question comes from Anthony Chester Lebiedzinski with Sidoti. Your line is open.

Anthony Chester Lebiedzinski: Thank you, and good morning, everyone. Certainly nice to see the really strong revenue growth, especially in Fishing. So as it relates to Fishing, how much was revenue helped by pricing versus better market conditions and a stronger competitive position?

David W. Johnson: We saw strong unit volume growth in our business, and that was a big driver for the quarter. Pricing certainly helped, and we are also seeing really strong demand for our broad line of trolling motors. That is very helpful.

Anthony Chester Lebiedzinski: Gotcha. Thanks, David. So do you think this is perhaps a sort of replacement cycle from the bump from COVID, or is there something else going on?

Helen P. Johnson-Leipold: The market is very hard to predict, but we have innovation that continues to drive purchases. Consumers are a little cautious with all the things going on, but innovation is the catalyst to get things moving. We are hoping this is the beginning of an upward trend, but it is going to be challenging, and innovation will be the key going forward.

Anthony Chester Lebiedzinski: Gotcha. Okay. Thanks for that. So as far as the other two segments, you highlighted the increased sales through e-commerce. Can you expand on that a little bit and, if possible, give us some numbers as it relates to the growth you saw in the quarter? And how are you thinking about the rest of fiscal 2026 as it relates to Diving and Watercraft and Camping?

Helen P. Johnson-Leipold: E-commerce is one of our growth initiatives, and we have put a hard core press on that. It reaches a much broader consumer base, and we are really excited about it. Our bricks-and-mortar partners remain important, and both channels complement each other. We have been up and running in a true digital mode for only about a year, so it is early, and we have a lot to learn, but it is a good opportunity to reach a broader audience. I think it will continue to grow. It is a smaller piece of the pie than our other sales, but from a growth standpoint it is helping us.

We do not do a lot of forward-looking commentary, but as we look at the third quarter, the signs in the second were good and better than they have been in the past. The world is complicated, and consumers have a lot going on, but it comes back to the product line, the brand, and our positioning in the market. We feel really good about where we are as a brand and as a company, and we are hoping the markets cooperate as well. It is good to have a quarter that feels very strong.

Anthony Chester Lebiedzinski: That is very helpful context. As far as the world out there, as you talk to your retail customers, since the Iran conflict started in late February, gas prices have gone up quite a bit. From the point-of-sale data you can access, have you seen any notable impact for your brands?

David W. Johnson: I would say not yet, Anthony. We have not seen a direct impact, but like a lot of companies, we are looking at inflationary pressure and higher input costs.

Helen P. Johnson-Leipold: And we are mindful of worried consumers whose confidence levels are down.

David W. Johnson: So far it is okay; we have not seen a direct impact, but we are looking at things in a neutral fashion over the next couple of quarters.

Anthony Chester Lebiedzinski: Understood. As far as gross margin, you had a strong improvement versus last year. You talked about fixed-cost absorption and cost savings. Was that kind of a 50/50 split? And second, regarding cost pressures, how should we think about gross margins for the rest of the fiscal year?

David W. Johnson: Most of the improvement was operating—so fixed-cost absorption. Our cost-savings program is also critical and helped as well. We are seeing cost pressure going forward. Like many companies, electronic industry component costs are dynamic for us, and that is something we have our eye on and are monitoring. That could be a bit of a headwind over the coming quarters, so it is a good thing we have our cost-savings efforts in place to help offset that.

Anthony Chester Lebiedzinski: Got it. In terms of operating expenses, they came in higher than we expected. Roughly, how much of the year-over-year increase came from sales-volume-related costs versus incentive compensation? And how should we think about operating expenses for the rest of the fiscal year?

David W. Johnson: A decent portion was volume related—probably about a third—and then we had some variable compensation accrual adjustments that made up about a third. There are some other items in there that we did not call out, like certain health care costs and consulting expense. But the two big ones were the volume-related items and the variable compensation.

Anthony Chester Lebiedzinski: And do you expect that to continue near term? Any general comments there?

David W. Johnson: The expense structure will probably settle down a little bit. Volume drives some of that, but in terms of our spending and our ability to manage, I think it will settle down over the next couple of quarters.

Helen P. Johnson-Leipold: We are investing and putting foundational systems in place, and we are investing against our key priorities. It is good spend, and it may not be long term. As David said, it will settle down, and we are investing in the right things to set us up for long-term success. We will get more efficient on the other side of this.

David W. Johnson: Agreed. We expect to be more efficient as these investments mature.

Anthony Chester Lebiedzinski: Lastly from me, the tax rate came in lower than we expected. David, can you address that and how we should think about the tax rate for the balance of the fiscal year?

David W. Johnson: Because we have the valuation allowance on the U.S. income right now, the tax rate will be up and down depending on the mix of profits we see in the quarter and what we are forecasting for the full year. A practical way to think about it is probably 4 to 5 million of tax expense for the year. How that is spread over the quarters depends on the mix of profit, so it is hard to give you a rate quarter by quarter.

Anthony Chester Lebiedzinski: Understood. That is definitely helpful. Thank you very much, and best of luck.

David W. Johnson: Thanks, Anthony.

Operator: I am not showing any further questions at this time. I would like to turn the call back over to Helen P. Johnson-Leipold.

Helen P. Johnson-Leipold: Thank you, everyone, for joining us today. If you have additional questions, please contact David W. Johnson or Patricia G. Penman. Have a good day. Thank you.

Operator: Thank you, ladies and gentlemen. This concludes today’s presentation. You may now disconnect, and have a wonderful day.

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