JOHNSON OUTDOORS INC

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) includes comments and analysis relating to the results of operations and financial condition of Johnson Outdoors Inc. and its subsidiaries (collectively, the “Company”) as of and for the three month periods ended December 27, 2024 and December 29, 2023. All monetary amounts, other than share and per share amounts, are stated in thousands.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) includes comments and analysis relating to the results of operations and financial condition of Johnson Outdoors Inc. and its subsidiaries (collectively, the “Company”) as of and for the three and six month periods ended March 28, 2025 and March 29, 2024. All monetary amounts, other than share and per share amounts, are stated in thousands.

Previous wording

Certain matters discussed in this Form 10-Q are “forward-looking statements,” and the Company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of those safe harbor provisions. These forward-looking statements can generally be identified as such because they include phrases such as the Company “expects,” “believes,” “anticipates,” “intends,” use of words such as “confident,” “could,” “may,” “planned,” “potential,” “should,” “will,” “would” or the negative of such words or other words of similar meaning. Similarly, statements that describe the Company’s future plans,

Current wording

Certain matters discussed in this Form 10-Q are “forward-looking statements,” and the Company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of those safe harbor provisions. These forward-looking statements can generally be identified as such because they include phrases such as the Company “expects,” “believes,” “anticipates,” “intends,” use of words such as “confident,” “could,” “may,” “planned,” “potential,” “should,” “will,” “would” or the negative of such words or other words of similar meaning. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated.

Previous wording

Net sales of $107,649 for the first quarter of fiscal 2025 decreased $30,995, or 22%, from the same period in the prior year. The decrease between quarterly periods was primarily due to ongoing market challenges in many of the Company's product categories, a cautious retail and trade environment, as well as increasing competitive pressure, which resulted in weaker demand and revenue across all segments of the Company's outdoor recreation products. Unfavorable overhead absorption due to the lower sales volumes and unfavorable product mix more than offset the Company's cost saving initiatives and contributed to an 8.2 point decline in gross margin, as well as a $20,285 decrease in operating profit in the current year quarter versus the prior year quarter.

Current wording

Net sales of $168,349 for the second quarter of fiscal 2025 decreased $7,507, or 4%, from the same period in the prior year. The decrease between quarterly periods was mainly driven by persistent market challenges across several of the Company's product categories, as well as a cautious approach from the retail and trade environment. These factors led to reduced demand and revenue in all segments of the Company's outdoor recreation products. Gross margin remained relatively flat as compared to the prior year quarter, at approximately 35%. Lower direct expenses driven by the decrease in sales volumes between periods, as well as lower promotions expense and a $3,370 decrease in expense related to the Company's deferred compensation plan contributed to a $5,154 improvement in operating profit in the current year quarter versus the prior year quarter.

Previous wording

As of December 27, 2024, the Company has combined the previously reported "Camping" and "Watercraft Recreation" segments into one segment, referred to as "Camping & Watercraft Recreation".

Current wording

As of December 27, 2024, and as referenced in “Note 16 – Segments of Business” of the notes to the accompanying Condensed Consolidated Financial Statements, the Company has combined the previously reported "Camping" and "Watercraft Recreation" segments into one segment, referred to as "Camping & Watercraft Recreation."

Previous wording

During the first quarter of fiscal 2025, the Company's Diving segment acquired a scuba equipment manufacturer for $12,180, which is expected to provide new innovative products, unlock synergies and enhance operating efficiencies for this segment.

Current wording

During the first quarter of fiscal 2025, the Company's Diving segment completed an acquisition of a scuba equipment manufacturer for $12,197, which is expected to provide new innovative products, unlock synergies and enhance operating efficiencies for this segment. See “Note 18 – Acquisitions” of the notes to the accompanying Condensed Consolidated Financial Statements for additional information.

Previous wording

The Company’s business is seasonal in nature. The first fiscal quarter traditionally falls prior to the Company’s primary selling season for its warm-weather outdoor recreation products. The table below sets forth a historical view of the Company’s seasonality during the last three fiscal years.

Current wording

The Company’s business is seasonal in nature. The second fiscal quarter traditionally falls within the Company’s primary selling season for its warm-weather outdoor recreation products. The table below sets forth a historical view of the Company’s seasonality during the last three fiscal years.

Previous wording

Consolidated net sales for the three months ended December 27, 2024 were $107,649, a decrease of $30,995, or 22%, compared to $138,644 for the three months ended December 29, 2023. Foreign currency translation had a negligible impact on current year first quarter net sales compared to the prior year's first quarter net sales.

Current wording

Consolidated net sales for the three months ended March 28, 2025 were $168,349, a decrease of $7,507, or 4%, compared to $175,856 for the three months ended March 29, 2024. Foreign currency translation had a negligible impact on current year second quarter net sales compared to the prior year's second quarter net sales.

Previous wording

Net sales for the three months ended December 27, 2024 for the Fishing business were $82,472, a decrease of $28,020, or 25%, from $110,492 during the first fiscal quarter of the prior year. Challenging consumer and trade dynamics, increased competitive pressure, and strong sell-in of new products in last year's quarter all contributed to the sales decline between quarters.

Current wording

Net sales for the three months ended March 28, 2025 for the Fishing business were $134,891, a decrease of $3,717, or 3%, from $138,608 during the second fiscal quarter of the prior year. The sales decline between quarters was due to continued challenging consumer and trade dynamics in this market.

Previous wording

Net sales for Diving for the first quarter of fiscal 2025 were $15,684, which declined $1,794, or 10%, compared to net sales of $17,478 for the three months ended December 29, 2023. The decline in sales over the prior year quarter was driven primarily by continued soft market demand across all geographic regions. Foreign currency translation had a favorable impact of less than 1% on sales in this segment versus the prior year quarter.

Current wording

Net sales for Diving for the second quarter of fiscal 2025 were $15,820, which declined $1,104, or 7%, compared to net sales of $16,924 for the three months ended March 29, 2024. The sales decline compared to the prior year quarter was mainly due to continuing soft market demand for our Diving segment products across all geographic regions, driven by global economic uncertainty. Foreign currency translation had a favorable impact of less than 1% on sales in this segment versus the prior year quarter.

Previous wording

Net sales for the Camping & Watercraft Recreation business were $9,451 for the first quarter of the current fiscal year, a decrease of $1,275, or 12%, from the prior year net sales during the same period of $10,726. The decrease is mainly attributable to declines in overall consumer demand for products in this market, primarily in the overall kayak industry.

Current wording

Net sales for the Camping & Watercraft Recreation business were $27,303 for the six months ended March 28, 2025, a decrease of $3,671, or 12%, from the prior year net sales during the same period of $30,974. As discussed above, the decrease over the

Previous wording

Cost of sales for the three months ended December 27, 2024 of $75,466 decreased $10,324 compared to $85,790 for the three months ended December 29, 2023, mainly due to the decrease in sales volumes, and the unfavorable mix of higher cost product between quarters.

Current wording

Cost of sales for the three months ended March 28, 2025 of $109,483 decreased $4,942 compared to $114,425 for the three months ended March 29, 2024, mainly due to a decrease in sales volumes over the prior year quarter.

Previous wording

For the three months ended December 27, 2024, gross profit as a percentage of net sales was 29.9% compared to 38.1% in the three month period ended December 29, 2023. The decline in gross profit percentage over the prior year quarter was primarily due to unfavorable overhead absorption as a result of lower sales volumes, promotional pricing on end-of-life products and changes in product mix toward lower margin products between quarters.

Current wording

For the six months ended March 28, 2025, gross profit as a percentage of net sales was 33.0% compared to 36.3% in the six month period ended March 29, 2024. The decline in gross profit percentage over the prior year-to-date period was primarily due to promotional pricing on end-of-life products and changes in product mix toward lower margin products between year-to-date periods.

Previous wording

Operating loss on a consolidated basis for the three month period ended December 27, 2024 was $20,239, compared to operating profit of $46 in the first quarter of the prior fiscal year. As discussed above, the decrease in operating profit between quarters is driven by lower sales volumes.

Current wording

Operating profit on a consolidated basis for the three month period ended March 28, 2025 was $4,901, compared to operating loss of $253 in the second quarter of the prior fiscal year. As discussed above, the increase in operating profit between quarters was driven by a reduction in operating expenses that more than offset the decrease in gross profit caused by lower sales volumes between periods.

Previous wording

Other income was $326 for the three months ended December 27, 2024 compared to $4,693 in the prior year period. The main driver of the $4,367 decrease over the prior year quarter was a $2,590 decrease in net investment gains and earnings on the assets related to the Company’s non-qualified deferred compensation plan in the current year quarter over the prior year quarter. Additionally, the prior year included a gain on the sale of building of approximately $1,900. For the three months ended December 27, 2024, foreign currency exchange gains were $203 compared to losses of $191 for the three months ended December 29, 2023.

Current wording

Other expense was $1,300 for the three months ended March 28, 2025 compared to other income of $2,448 in the prior year period. The main driver of the $3,748 decrease over the prior year quarter was a $3,370 decrease in net investment gains and earnings on the assets related to the Company’s non-qualified deferred compensation plan in the current year quarter over the prior year quarter, entirely offset as a reduction to operating expense as noted above. For the three months ended March 28, 2025, foreign currency exchange losses were $20 compared to gains of $46 for the three months ended March 29, 2024.

Previous wording

The Company’s provision for income taxes is based upon estimated annual effective tax rates in the tax jurisdictions in which the Company operates. The effective tax rate for the three month period ended June 28, 2024 was a tax benefit of 19.2%, due to the decline in profit before taxes, as well as geographic mix of profits and losses.

Current wording

The Company’s provision for income taxes is based upon estimated annual effective tax rates in the tax jurisdictions in which the Company operates. The effective tax rates for the three and six month periods ended March 28, 2025 were an expense of 44.6% and a benefit of 12.1%, respectively, compared to expense of 28.4% and 31.4% in the corresponding periods of the prior year.

Previous wording

Net loss for the three months ended December 27, 2024 was $15,290, or $1.49 per diluted common class A and B share, compared to net income of $3,955, or $0.38 per diluted common class A and B share, for the first quarter of the prior fiscal year.

Current wording

Net loss for the six months ended March 28, 2025 was $12,986, or $1.26 per diluted common class A and B share, compared to net income of $6,111, or $0.59 per diluted common class A and B share, for the second quarter of the prior fiscal year.

Previous wording

Cash and cash equivalents and short term investments totaled $101,617 as of December 27, 2024, compared to $109,555 as of December 29, 2023. The Company’s debt to total capitalization ratio was 0% as of December 27, 2024 and December 29, 2023. The Company’s total debt balance was $0 as of each of December 27, 2024 and December 29, 2023. See “Note 11 – Indebtedness” in the notes to the Company’s accompanying condensed consolidated financial statements for further discussion.

Current wording

Cash and cash equivalents and short term investments totaled $93,951 as of March 28, 2025, compared to $84,270 as of March 29, 2024. The Company’s debt to total capitalization ratio was 0% as of March 28, 2025 and March 29, 2024. The Company’s total debt balance was $0 as of each of March 28, 2025 and March 29, 2024. See “Note 11 – Indebtedness” in the notes to the Company’s accompanying condensed consolidated financial statements for further discussion.

Previous wording

Accounts receivable, net of allowance for credit losses, were $68,297 as of December 27, 2024, a decrease of $14,746 compared to $83,043 as of December 29, 2023. The decrease is consistent with the decreased sales volumes year over year. Inventories were $201,606 as of December 27, 2024, a decrease of $65,715, compared to $267,321 as of December 29, 2023. The decrease is consistent with the Company's ongoing efforts to reduce inventory balances. Accounts payable were $33,491 at December 27, 2024 compared to $43,403 as of December 29, 2023.

Current wording

Accounts receivable, net of allowance for credit losses, were $116,776 as of March 28, 2025, a decrease of $12,569 compared to $129,345 as of March 29, 2024. The decrease is consistent with the decreased sales volumes year over year. Inventories were $180,057 as of March 28, 2025, a decrease of $69,144, compared to $249,201 as of March 29, 2024. The decrease is consistent with the Company's ongoing efforts to reduce inventory balances. Accounts payable were $44,323 at March 28, 2025 compared to $50,374 as of March 29, 2024.

Previous wording

Cash used for operations totaled $36,909 for the three months ended December 27, 2024 compared to $33,687 during the corresponding period of the prior fiscal year. The decrease in cash provided by operations over the prior year three month period was due primarily to lower income on decreased sales volumes between quarters, offset in part by cash provided by working capital reductions between quarters. Depreciation and amortization charges were $4,803 for the three month period ended December 27, 2024 compared to $5,027 for the corresponding period of the prior year.

Current wording

Cash used for operations totaled $38,566 for the six months ended March 28, 2025 compared to $51,764 during the corresponding period of the prior fiscal year. The decrease in cash used for operations over the prior year six month period was due primarily to cash provided by working capital reductions between quarters, partially offset by lower income on decreased sales volumes between periods. Depreciation and amortization charges were $10,041 for the six month period ended March 28, 2025 compared to $9,949 for the corresponding period of the prior year.

Previous wording

Cash used for investing activities totaled $6,500 for the three months ended December 27, 2024 compared to cash provided by investing activities of $4,685 for the corresponding period of the prior fiscal year. Current year cash used for investing activities reflects $12,180 paid to acquire a business, partially offset by maturity of investments of $9,764. The prior year period included proceeds from maturity of investments of $7,500, as well as proceeds from the sale of a building of $2,189. Capital expenditures were $4,084 in the three months ended December 27, 2024, compared to $5,004 in the prior year to date period which included investments in expansion of Fishing facilities to accommodate additional production. Any additional capital expenditures in fiscal 2025 are expected to be funded by working capital.

Current wording

Cash used for investing activities totaled $7,749 for the six months ended March 28, 2025 compared to cash provided by investing activities of $7,031 for the corresponding period of the prior fiscal year. Current year cash used for investing activities reflects $12,197 paid to acquire a business, partially offset by the maturity of investments of $11,826. The prior year period included proceeds from maturity of investments of $15,000, as well as proceeds from the sale of a building of $2,234. Capital expenditures were $7,378 in the six months ended March 28, 2025, compared to $10,203 in the prior year to date period which included investments in expansion of Fishing facilities to accommodate additional production. Any additional capital expenditures in fiscal 2025 are expected to be funded by working capital.

Previous wording

Cash used for financing activities totaled $3,450 for the three months ended December 27, 2024 compared to $3,588 for the three month period ended December 29, 2023 and, for both periods, represents the payment of dividends and purchase of treasury stock. The Company had no debt during either three month period ended December 27, 2024 and December 29, 2023. See Note 11 "Indebtedness" to the accompanying Condensed Consolidated Financial Statements for additional information on our credit facilities.

Current wording

Cash used for financing activities totaled $6,879 for the six months ended March 28, 2025 compared to $6,945 for the six month period ended March 29, 2024 and, for both periods, represents the payment of dividends and purchase of treasury stock. The Company had no debt during either six month period ended March 28, 2025 and March 29, 2024. See Note 11 "Indebtedness" to the accompanying Condensed Consolidated Financial Statements for additional information on our credit facilities.

Previous wording

As of December 27, 2024 the Company held approximately $58,043 of cash, cash equivalents and short-term investments in bank accounts in foreign taxing jurisdictions.

Current wording

As of March 28, 2025 the Company held approximately $56,367 of cash, cash equivalents and short-term investments in bank accounts in foreign taxing jurisdictions.

Previous wording

The Company’s critical accounting policies and estimates are identified in the Company’s Annual Report on Form 10-K for the fiscal year ending September 27, 2024 in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Critical Accounting Estimates”, which was filed with the Securities and Exchange Commission on December 11, 2024. There were no significant changes to the Company’s critical accounting policies and estimates during the three months ended December 27, 2024.

Current wording

The Company’s critical accounting policies and estimates are identified in the Company’s Annual Report on Form 10-K for the fiscal year ending September 27, 2024 in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Critical Accounting Estimates”, which was filed with the Securities and Exchange Commission on December 11, 2024. There were no significant changes to the Company’s critical accounting policies and estimates during the six months ended March 28, 2025.