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Item 2. Management’s Discussion and Analysis

2026-05-08 compared with 2026-02-06 · 94 added, 59 removed, 101 unchanged (60% of the section changed)

1 unchanged sentence

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 January 2, 2026 and December 27, 2024.

and its subsidiaries (collectively, the “Company”) as of and for the three and six month periods ended April 3, 2026 and March 28, 2025.

All monetary amounts, other than share and per share amounts, are stated in thousands.

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Forward Looking Statements

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.

JOHNSON OUTDOORS INC.

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.

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uncertainties stemming from political instability or changes in government policy and actions (and its impact on the economies in jurisdictions where the Company has operations);

uncertainties

JOHNSON OUTDOORS INC.

stemming from changes in U.S.

uncertainties stemming from changes in U.S.

trade policies, tariffs, and the reaction of other countries to such changes;

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Johnson-Leipold, the Company’s Chairman and Chief Executive Officer, members of her family and related entities.

Net sales of $140,935 for the first quarter of fiscal 2026 increased $33,286, or 31%, from the same period in the prior year.

The increase between quarterly periods was mainly driven by new product innovation and market stabilization between periods.

Net sales of $194,480 for the second quarter of fiscal 2026 increased $26,131, or 16%, from the same period in the prior year.

The increase between quarterly periods was mainly driven by improved trade conditions, price increases, and strong overall product response in the markets in which we compete, especially in the Fishing segment.

Gross margin increased to 38.8% compared to 35.0% in the prior year quarter.

Taking into account the seasonal nature of the Company's business, as described below, the increase in net sales and the significant increase in margin contributed to a $17,327 improvement in operating loss in the current year quarter versus the prior year quarter.

The sales gain and margin improvement contributed to a $5,448 increase in operating income in the current year quarter versus the prior year quarter.

On February 20, 2026, the Supreme Court of the United States ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful.

Certain of the Company's imports were previously subject to such tariffs under IEEPA.

Effective April 20, 2026, the U.S.

Customs and Border Protection launched a platform for importers of record to begin submitting IEEPA tariff refund requests.

We are unable to estimate any applicable financial effects for any recovery of potential

JOHNSON OUTDOORS INC.

refunds, as the timing and amount of recovery are uncertain.

We will continue to assess and evaluate new information as it becomes available.

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 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.

JOHNSON OUTDOORS INC.

2025 2024 2023

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The Company’s net sales and operating profit (loss) by business segment for the periods shown below were as follows:

Three Months Ended

January 2, 2026 December 27, 2024

Three Months Ended Six Months Ended

April 3, 2026 March 28, 2025 April 3, 2026 March 28, 2025

Fishing $ 159,025 $ 134,891 $ 271,395 $ 217,363

Camping & Watercraft Recreation

18,053 17,852 28,654 27,303

Diving 17,315 15,820 35,289 31,504

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See “Note 16 – Segments of Business” of the notes to the accompanying Condensed Consolidated Financial Statements for the definition of segment net sales and operating profit.

Net Sales - First Fiscal Quarter

Consolidated net sales for the three months ended January 2, 2026 were $140,935, an increase of $33,286, or 31%, compared to $107,649 for the three months ended December 27, 2024.

Foreign currency translation had a negligible impact on current year first quarter consolidated net sales compared to the prior year's first quarter net sales.

Net sales for the three months ended January 2, 2026 for the Fishing business were $112,370, an increase of $29,898, or 36%, from $82,472 during the first fiscal quarter of the prior year.

The increase in sales in this segment between quarters was mainly due to improved trade inventory levels and sales generated by the launch of new products.

Net sales for the Camping & Watercraft Recreation business were $10,601 for the first quarter of the current fiscal year, an increase of $1,150, or 12%, from the prior year net sales during the same period of $9,451.

Growth in e-commerce channels overcame the unfavorable impact of a continuing weak end market for watercraft recreation.

Net sales for Diving for the first quarter of fiscal 2026 were $17,974, which increased $2,290, or 15%, compared to net sales of $15,684 for the three months ended December 27, 2024.

The sales increase over the prior year first quarter was primarily driven by the success of new products, particularly in the U.S.

Additionally, foreign currency translation had a favorable impact of approximately 4% on sales in this segment versus the prior year first quarter.

Cost of Sales

Net Sales - Second Fiscal Quarter

Consolidated net sales for the three months ended April 3, 2026 were $194,480, an increase of $26,131, or 16%, compared to $168,349 for the three months ended March 28, 2025.

Foreign currency translation had an impact of less than 1% on current year second quarter consolidated net sales compared to the prior year's second quarter consolidated net sales.

Net sales for the three months ended April 3, 2026 for the Fishing business were $159,025, an increase of $24,134, or 18%, from $134,891 during the second fiscal quarter of the prior year.

The increase in sales in this segment between quarters was mainly due to improved trade conditions, a stronger competitive position in the market, and pricing.

JOHNSON OUTDOORS INC.

Cost of sales for the three months ended January 2, 2026 of $89,325 increased $13,859 compared to $75,466 for the three months ended December 27, 2024, due primarily to the increase in sales volumes over the prior year quarter as well as higher costs from tariffs on purchased raw materials and components.

Net sales for the Camping & Watercraft Recreation business were $18,053 for the second quarter of the current fiscal year, an increase of $201, or 1%, from the prior year net sales during the same period of $17,852.

Growth in e-commerce channels overcame the unfavorable impact of a continuing weak end market for watercraft recreation products.

Net sales for Diving for the second quarter of fiscal 2026 were $17,315, which increased $1,495, or 9%, compared to net sales of $15,820 for the three months ended March 28, 2025.

The sales increase over the prior year second quarter was primarily driven by the improved market conditions and growth in ecommerce.

Additionally, foreign currency translation had a favorable impact of approximately 5% on sales in this segment in the current year second quarter versus the prior year second quarter.

Net Sales - Year-To-Date

Consolidated net sales for the six months ended April 3, 2026 were $335,415, an increase of $59,417, or 21.5%, compared to $275,998 for the six months ended March 28, 2025.

Foreign currency translation had a negligible impact on net sales of the current year to date period compared to the prior year to date period.

Net sales for the six months ended April 3, 2026 for the Fishing business were $271,395, an increase of $54,032, or 25%, from $217,363 during the prior year to date period.

The increase in sales in this segment between year to date periods was mainly due to improved trade conditions, sales generated by the launch of new products, and pricing.

Net sales for the six months ended April 3, 2026 for the Camping & Watercraft Recreation business were $28,654, an increase of $1,351, or 5%, from the prior year net sales during the same period of $27,303.

Growth in e-commerce channels overcame the unfavorable impact of a continuing weak end market for watercraft recreation products.

Net sales for the six months ended April 3, 2026 for the Diving business were $35,289, an increase of $3,785, or 12%, compared to net sales of $31,504 for the six months ended March 28, 2025.

The sales increase over the prior year to date period was primarily driven by the improved market conditions and growth in ecommerce.

Additionally, foreign currency translation had a favorable impact of approximately 5% on sales in this segment versus the prior year to date period.

Cost of Sales

Cost of sales for the three months ended April 3, 2026 of $118,992 increased $9,509 compared to $109,483 for the three months ended March 28, 2025, due primarily to the increase in sales volumes over the prior year quarter as well as higher costs from tariffs in the current year second quarter on purchased raw materials and components.

Higher material costs were offset in part by lower labor costs driven by efficiencies from cost cutting initiatives.

Cost of sales for the six months ended April 3, 2026 of $208,317 increased $23,368 compared to $184,949 for the six months ended March 28, 2025, due primarily to the increase in sales volumes over the prior year to date period as well as higher costs from tariffs on purchased raw materials and components incurred in the current year to date period.

Higher material costs were offset in part by lower labor costs driven by efficiencies from cost cutting initiatives.

Gross Profit Margin

For the three months ended January 2, 2026, gross profit as a percentage of net sales increased to 36.6% compared to 29.9% in the three month period ended December 27, 2024, mainly as a result of improved overhead absorption driven by higher sales volumes between periods as well as a favorable mix of products sold.

Pricing actions taken by the Company helped to offset the impact of incremental tariffs in the current year quarter.

For the three months ended April 3, 2026, gross profit as a percentage of net sales increased to 38.8% compared to 35.0% in the three month period ended March 28, 2025, mainly as a result of improved overhead absorption driven by higher sales volumes between the quarters.

Pricing actions taken by the Company and cost saving initiatives also helped offset the impact of incremental tariffs in the current quarter.

For the six months ended April 3, 2026, gross profit as a percentage of net sales increased to 37.9% compared to 33.0% in the six months ended March 28, 2025, mainly as a result improved overhead absorption driven by higher sales volumes between the periods.

Pricing actions taken by the Company and cost savings initiatives also helped to offset the impact of incremental tariffs in the current year to date period.

Operating Expenses

Operating expenses were $54,522 for the three months ended January 2, 2026, compared to $52,422 for the three months ended December 27, 2024.

The main drivers of the $2,100 increase between quarters were higher sales-volume related costs offset in part by lower warranty expenses.

Operating expenses were $65,139 for the three months ended April 3, 2026, compared to $53,965 for the three months ended March 28, 2025.

The main drivers of the $11,174 increase between quarters were higher sales-volume related costs as well as increased variable compensation costs.

Operating expenses were $119,661 for the six months ended April 3, 2026, compared to $106,387 for the six months ended March 28, 2025.

The main drivers of the $13,274 increase between year to date periods were higher sales-volume related costs, higher variable compensation costs and additional professional services expense in the current year to date period.

JOHNSON OUTDOORS INC.

Operating Profit/Loss

Operating loss on a consolidated basis for the three month period ended January 2, 2026 was $2,912, compared to operating loss of $20,239 in the first quarter of the prior fiscal year.

As discussed above, the improvement in operating loss between quarters was driven primarily by an increase in sales and gross margin improvements between periods.

Interest expense was $57 and $47 for the three months ended January 2, 2026 and December 27, 2024, respectively.

Interest income was $1,320 and $1,033 for the three months ended January 2, 2026 and December 27, 2024, respectively.

Operating profit on a consolidated basis for the three month period ended April 3, 2026 was $10,349, compared to $4,901 in the second quarter of the prior fiscal year.

As discussed above, the improvement in operating profit between quarters was driven primarily by an increase in sales and gross margin improvements between periods.

Operating profit on a consolidated basis for the six month period ended April 3, 2026 was $7,437, compared to operating loss of $15,338 in the prior year to date period.

As discussed above, the improvement in operating profit (loss) was driven primarily by an increase in sales and gross margin improvements between periods.

Interest expense was $48 and $68 for the three months ended April 3, 2026 and March 28, 2025, respectively, and $105 and $115 for the six months ended April 3, 2026 and March 28, 2025, respectively.

Interest income was $632 and $625 for the three months ended April 3, 2026 and March 28, 2025, respectively, and $1,952 and $1,658 for the six months ended April 3, 2026 and March 28, 2025, respectively.

Other Expense (Income), net

Other income was $394 for the three months ended January 2, 2026 compared to $326 in the prior year period.

For the three months ended January 2, 2026, foreign currency exchange losses were $69 compared to foreign currency exchange gains of $203 for the three months ended December 27, 2024.

Other income was $726 for the three months ended April 3, 2026 compared to $1,300 in the prior year period.

The main driver of the $574 decrease period over period was a $418 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, entirely offset as a reduction to operating expense.

For the three months ended April 3, 2026, foreign currency exchange gains were $196 compared to foreign currency exchange losses of $21 for the three months ended March 28, 2025.

Other income was $332 for the six months ended April 3, 2026 compared to $974 in the prior year period.

The $642 decrease was primarily attributable to a $639 decrease in net investment gains and earnings on the assets related to the Company's non-qualified deferred compensation plan in the current year-to-date period, entirely offset as a reduction to operating expense.

For the six months ended April 3, 2026, foreign currency exchange gains were $128 compared to foreign currency exchange gains of $183 for the six months ended March 28, 2025.

Income Tax Expense

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 Company recorded income tax expense of $2,045 in the three month period ended January 2, 2026 which equated to an effective tax rate of (162.9)% which was impacted by an adjustment related to its U.S.

The Company recorded income tax expense of $798 and $2,843, respectively, in the three and six month periods ended April 3, 2026 which equated to an effective tax rate of 7.8% and 31.8%, respectively.

The effective tax rate was impacted by an adjustment related to the Company's U.S.

valuation allowance on deferred tax assets.

The Company recorded a benefit of $3,637 in the corresponding period of the prior year which equated to an effective tax rate of 19.2%.

The Company recorded an expense of $1,854 during the three months ended March 28, 2025, which equated to an effective tax rate of 44.6%.

The Company recorded a benefit of $1,783 during the six months ended March 28, 2025, which equated to an effective tax benefit of 12.1%.

Net Income/Loss

Net loss for the three months ended January 2, 2026 was $3,300, or $0.33 per diluted common class A and B share, compared to $15,290, or $1.49 per diluted common class A and B share, for the first quarter of the prior fiscal year.

Net income for the three months ended April 3, 2026 was $9,409, or $0.89 per diluted common class A and B share, compared to $2,304, or $0.22 per diluted common class A and B share, for the second quarter of the prior fiscal year.

Net income for the six months ended April 3, 2026 was $6,109, or $0.58 per diluted common class A and B share, compared to net loss of $12,986, or $1.26 per diluted common class A and B share, during the corresponding period of the prior fiscal year.

Liquidity and Financial Condition

Cash and cash equivalents and short term investments totaled $130,731 as of January 2, 2026, compared to $101,617 as of December 27, 2024.

The Company’s debt to total capitalization ratio was 0% as of January 2, 2026 and December 27, 2024.

The Company’s total debt balance was $0 as of each of January 2, 2026 and December 27, 2024.

Cash and cash equivalents and short term investments totaled $107,876 as of April 3, 2026, compared to $93,951 as of March 28, 2025.

The Company’s debt to total capitalization ratio was 0% as of April 3, 2026 and March 28, 2025.

The Company’s total debt balance was $0 as of each of April 3, 2026 and March 28, 2025.

See “Note 11 – Indebtedness” in the notes to the Company’s accompanying condensed consolidated financial statements for further discussion of our credit facilities.

Accounts receivable, net of allowance for credit losses, were $85,108 as of January 2, 2026, an increase of $16,811 compared to $68,297 as of December 27, 2024.

Accounts receivable, net of allowance for credit losses, were $126,852 as of April 3, 2026, an increase of $10,076 compared to $116,776 as of March 28, 2025.

The increase is consistent with the increased sales volumes over the prior year quarter.

Inventories were $183,940 as of January 2, 2026, a decrease of $17,666, compared to $201,606 as of December 27, 2024.

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decrease is consistent with the Company's ongoing efforts to reduce inventory balances.

Accounts payable were $48,135 at January 2, 2026 compared to $33,491 as of December 27, 2024.

Inventories were $186,900 as of April 3, 2026, an increase of $6,843, compared to $180,057 as of March 28, 2025.

The increase is the result of a strategic ramp-up of inventory and safety stock in response to higher sales volumes period over period.

Accounts payable were $52,332 at April 3, 2026 compared to $44,323 as of March 28, 2025.

The increase of $8,010 is consistent with the increase in inventory.

The Company’s cash flows from operating, investing and financing activities, as presented in the Company’s accompanying Condensed Consolidated Statements of Cash Flows, are summarized in the following table:

Three months ended

(thousands) January 2,

2026 December 27,

Cash provided by (used for):

Six months ended

(thousands) April 3,

2026 March 28,

Cash used for:

Operating activities $ (50,700) $ (38,566)

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Operating Activities

Cash used for operations totaled $38,415 for the three months ended January 2, 2026 compared to $36,909 during the corresponding period of the prior fiscal year.

The increase in cash used for operations over the prior year three month period was due primarily to working capital changes between quarters.

Depreciation and amortization charges were $5,099 for the three month period ended January 2, 2026 compared to $4,803 for the corresponding period of the prior year.

Cash used for operations totaled $50,700 for the six months ended April 3, 2026 compared to $38,566 during the corresponding period of the prior fiscal year.

The increase in cash used for operations over the prior year six month period was due primarily to inventory changes between periods offset in part by higher income in the current year to date period.

Depreciation and amortization charges were $10,097 for the six month period ended April 3, 2026 compared to $10,041 for the corresponding period of the prior year.

Investing Activities

Cash used for investing activities totaled $4,293 for the three months ended January 2, 2026 compared to $6,500 for the corresponding period of the prior fiscal year.

Cash used for investing activities totaled $10,475 for the six months ended April 3, 2026 compared to $7,749 for the corresponding period of the prior fiscal year.

The prior year period reflects $12,197 paid to acquire a business, partially offset by proceeds from maturity of investments of $11,826.

Capital expenditures were $4,293 in the three months ended January 2, 2026, compared to $4,084 in the prior year to date period.

Capital expenditures were $10,496 in the six months ended April 3, 2026, compared to $7,378 in the prior year to date period.

Any additional capital expenditures in fiscal 2026 are expected to be funded by working capital.

Financing Activities

Cash used for financing activities totaled $3,479 for the three months ended January 2, 2026 compared to $3,450 for the three month period ended December 27, 2024 and represents the payment of dividends and purchase of treasury stock for both periods.

The Company had no debt during either three month period ended January 2, 2026 and December 27, 2024.

Cash used for financing activities totaled $6,897 for the six months ended April 3, 2026 compared to $6,879 for the six month period ended March 28, 2025 and represents the payment of dividends and purchase of treasury stock for both periods.

The Company had no debt during either six month period ended April 3, 2026 and March 28, 2025.

See Note 11 "Indebtedness" to the accompanying Condensed Consolidated Financial Statements for additional information on our credit facilities.

As of January 2, 2026 the Company held approximately $66,152 of cash, cash equivalents and short-term investments in bank accounts in foreign taxing jurisdictions.

As of April 3, 2026 the Company held approximately $61,795 of cash, cash equivalents and short-term investments in bank accounts in foreign taxing jurisdictions.

Contractual Obligations and Off Balance Sheet Arrangements

The Company has contractual obligations and commitments to make future payments including under operating leases and open purchase orders.

There have been no changes outside of the ordinary course of business in the specified contractual obligations during the quarter ended January 2, 2026.

There have been no changes outside of the ordinary course of business in the specified contractual obligations during the quarter ended April 3, 2026.

The Company utilizes letters of credit primarily as security for the payment of future claims under its workers compensation insurance.

Letters of credit outstanding were approximately $67 and $67 as of January 2, 2026 and December 27, 2024, respectively.

Letters of credit outstanding were approximately $51 and $67 as of April 3, 2026 and March 28, 2025, respectively.

The Company has no other off-balance sheet arrangements.

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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 October 3, 2025 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 12, 2025.

There were no significant changes to the Company’s critical accounting policies and estimates during the three months ended January 2, 2026.

There were no significant changes to the Company’s critical accounting policies and estimates during the six months ended April 3, 2026.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis