Johnson Outdoors Inc.

Third-quarter sales increased 5% versus the prior-year quarter. Operating income was $18.3 million, up $11 million year over year, and profit before income taxes was $23.3 million versus $10.5 million last year. Gross margin was 45.3%, up 7.7 points, with approximately $15 million in tariff refunds contributing; excluding that benefit, gross margin would have been modestly lower than last year because of higher raw materials costs. Year-to-date gross margin was 40.6%, up 5.8 points, and profit before income taxes was $32.2 million versus a loss of $4.3 million in the prior-year period. Inventory ended the quarter at $188.3 million, up about $24.5 million year over year. Management did not provide formal next-quarter or full-year revenue guidance, but said it does not anticipate additional meaningful tariff refunds and expects the full-year tax expense to be about $5 million to $6 million.

Helen Johnson-Leipold said the quarter reflected the strength of the company’s market-leading brands and progress on innovation leadership, digital/e-commerce excellence, and operational efficiencies. She highlighted healthy demand in fishing, stronger diving sales, and continued brand strength in Jetboil and Old Town, while acknowledging that camping and watercraft faced weak market conditions. Her tone was constructive but cautious, emphasizing that the company is focused on positioning the business to perform across a range of market conditions.

Asad Rahman said gross margin improved to 45.3% because of a roughly $15 million tariff refund, and noted that excluding that benefit, gross margin would have been modestly lower than last year due to higher raw material costs. He said operating expenses rose $7 million, driven mainly by sales-volume-related costs and variable compensation, with roughly half of the increase tied to variable comp. He also said inventory increased to $188.3 million to support demand, the balance sheet remains debt-free, and the company continues to pay a meaningful dividend; for the full year, he estimated tax expense of about $5 million to $6 million.

Analysts focused on how the quarter progressed through the period, the impact of pricing on fishing revenue, the gross margin outlook, higher operating expenses, and the tax rate. Management said momentum was good but the market is complex, pricing was used strategically where it made sense, and gross margin excluding refunds was essentially flat with pricing and cost savings offsetting higher raw materials and dynamic electronic component costs. On operating expenses, management said roughly half the increase was variable compensation, with the rest tied to volume-related costs and other expenses; on taxes, the CFO said the valuation allowance on U.S. income means quarterly tax rates will fluctuate, with full-year tax expense expected at about $5 million to $6 million.