Johnson Outdoors Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended September 30, 2022 (52 weeks); comparison is with FY2021, also 52 weeks. Dollar amounts below are in millions unless noted. The filing also reports unaudited fourth-quarter results.
Business context and performance
Johnson Outdoors designs, manufactures and markets outdoor recreation products across Fishing (Minn Kota, Humminbird, Cannon), Camping (Eureka!, Jetboil), Watercraft Recreation (Old Town, Ocean Kayak) and Diving (SCUBAPRO). Fishing is its largest segment. Management said demand remained strong, but supply constraints—especially for Fishing electronics components—limited its ability to complete and ship orders.
Key financial metrics
| Metric | FY2022 | FY2021 |
|---|---|---|
| Net sales | $743.4 | $751.7 |
| Gross profit / margin | $271.3 / 36.5% | $334.1 / 44.5% |
| Operating profit / margin | $66.3 / 8.9% | $111.3 / 14.8% |
| Net income | $44.5 | $83.4 |
| Diluted EPS | $4.37 | $8.21 |
| Cash from operating activities | ($62.1) | $58.3 |
| Capital expenditures | $31.7 | $21.4 |
| Cash and cash equivalents at year-end | $129.8 | $240.4 |
| Working capital / current ratio | $365.6 / 4.2:1 | $353.7 / 3.6:1 |
| Outstanding debt at year-end | None | None |
Inventory rose to $248.6 million from $166.6 million, including $166.4 million of raw materials. The inventory balance is net of $9.1 million in reserves. The company had a $75 million revolving credit facility, with an option to seek an additional $50 million subject to lender approval; the facility expires July 15, 2026.
Changes versus comparable periods
- Full-year sales decreased 1%, while operating profit fell 40% and net income fell 47%. Higher material costs and lost shipments due to component shortages drove the decline; lower operating expenses only partly offset the gross-profit deterioration.
- Fishing sales declined 5% to $526.6 million and segment operating profit fell to $65.4 million from $122.5 million. Camping sales rose 12% to $70.4 million; Watercraft Recreation rose 2% to $67.9 million; Diving rose 14% to $78.9 million.
- Operating cash flow swung to an outflow of $62.1 million, principally reflecting lower net income and working-capital investment, including an $89.3 million inventory cash use. Cash fell by $110.6 million during the year.
- FY2022 fourth-quarter sales were $196.4 million versus $166.3 million; operating profit was $13.3 million versus $13.6 million; net income was $9.7 million versus $6.9 million. Quarter-to-quarter comparisons reflect the company’s seasonal business.
- FY2022 dividends declared totaled $12.2 million; cash dividends paid were $12.1 million. Class A dividends declared were $1.21 per share for the year.
Outlook, risks and unusual items
- Management expected supply-chain disruptions and inflationary input costs to continue into FY2023. It planned to pursue options beyond inventory build-up, monitor demand and actively manage inventory levels above normal. The filing gives no numerical FY2023 sales or earnings guidance.
- Management warned that supply constraints and elevated costs could affect future cost of sales and margins; demand moderation, inflation, rising interest rates and weaker discretionary spending could also pressure sales. The company said it could not predict whether normal seasonality would return.
- FY2022 other expense was $8.1 million, including $5.9 million of net market losses on deferred-compensation plan assets and $1.7 million of currency losses. Market movements on the plan assets are offset by compensation expense, according to the filing.
- The independent auditor issued unqualified opinions on the financial statements and internal controls. Its critical audit matter was the judgment involved in assessing obsolete and excess Fishing inventory reserves. No goodwill impairment was recorded in FY2022.
- The company disclosed no material pending litigation and no other off-balance-sheet arrangements. It identified foreign exchange, supplier concentration and availability, tariffs, cyber risks, weather, and consumer demand as risks. The Johnson family held approximately 75% of voting power as of September 30, 2022.
Important facts for investors to verify
- Whether Fishing component availability improved and whether outstanding customer demand converted into shipments.
- Inventory sell-through, obsolescence reserves and cash conversion, given the sharp inventory increase and negative operating cash flow.
- Whether higher input, freight and labor costs were passed through to customers and gross margins recovered.
- Actual FY2023 demand and seasonality relative to management’s cautious outlook, including any effects of inflation and consumer spending.
- Liquidity and capital allocation: cash levels, use of the revolving facility, capital spending and sustainability of dividends.