Patricia Penman - VP, Global Marketing Services & Communication Johnson-Leipold - Chairman and CEO David Johnson - VP and CFO

George Kelly - Imperial Capital

Hello, everyone and welcome to the Johnson Outdoors Fourth Quarter 2016 Earnings Conference Call. Today’s call will be led by Helen Johnson-Leipold, Johnson Outdoors’ Chairman and Chief Executive Officer. Also on the call is, David Johnson, Vice President and Chief Financial Officer. Prior to the question-and-answer session, all participants will be placed in a listen-only mode. After the prepared remarks, the question-and-answer session will begin. [Operator Instructions] This call is being recorded. Your participation implies consent to our recording of this call, if you do not agree to these terms, simply drop-off the line. I would now like to turn the call over to Patricia Penman from Johnson Outdoors. Please go ahead, Ms. Penman.

Thank you, Nicole. Good morning, everyone and thank you for joining us for our discussion of Johnson Outdoors’ fourth quarter and full fiscal year results for the 2016’s fiscal year. If you need a copy of our news release issued this morning and is available on the Johnson Outdoors’ website at www.johnsonoutdoors.com under Investor Relations. Before I turn the call over to Helen, I need to remind you that this conference call may contain forward-looking statements. These statements are made on the basis of our views and assumptions at this time. They are not guarantees of future performance. Actual events may differ materially from those statements due to a number of factors, many of which are beyond Johnson Outdoors’ control. These risks and uncertainties include those listed in today’s press release and our filings with the Securities and Exchange Commission. If you have additional questions following the call, please contact me. I’d now like to turn the call over to Helen Johnson-Leipold, Chairman and Chief Executive Officer.

Good morning. I’ll start off with comments on the quarter and full year results, discuss key performance drivers in each business and outline priorities going forward. Dave will review financial drivers behind results, then we’ll take your questions. Fourth quarter results reflect the industry-wide slowdown of our outdoor recreation markets, and show our earnings and sales at the lowest of the year. This year’s fourth quarter sales were $75 million and net loss was $2 million or $0.21 per diluted share. A shift in orders due to our product-line technology, restage in Marine Electronics, along with a $4 million plus decline in non-core military tent sales in our outdoor gear business lead to an unfavorable quarter-over-quarter comparison. Heading in to fiscal 2017, positive momentum for new products is building rapidly and open orders are steadily growing. For the full year, strong performance through the first nine-months more than offset the fourth quarter slowdown. Total company sales for the year increased to $434 million, operating profit grew 28% to $23 million, and net earnings advanced 27% to $13.5 million or $1.34 per diluted share. Fiscal 2016 was the first year of our new strategic plan and we are positioning ourselves to deliver incremental growth in sales and accelerated growth and profitability. New product drove strong consumer demand in 2016, notably the Minn Kota Riptide Ulterra Power assist and auto cylinder plate salt water trolling motor, Humminbird HELIX series of fish finders with patented inside imaging, sonar at an unbeatable price value, Old Town Predator fishing kayak designed by anglers for anglers, and Jetboil Genesis our packable, lightweight dual burner cooking system. Importantly, performance this year reflects how critical, sustained innovation is in our ability and capacity to deliver long term profitable growth, particularly in our fishing business, which once again delivered…

Thank you Helen. For fiscal 2016, total company net sales increased 1% versus the previous fiscal year. New products in Minn Kota, Humminbird, Jetboil and Old Town brands more than offset lower sales in dive equipment and military tents. Foreign currency translation also had a slight unfavorable effect on net sales. And we saw improved gross margins in every margins. Year-over-year gross margins are up 0.8 points due to the combination of innovation, lower cost in certain segments and a strong mix of products. The $312,000 decrease in operating expense was driven primarily by an improvement of approximately $9.9 million in net legal expense, which was offset in part by $6.2 million of impairment charges on diving goodwill, recognized in the third quarter of the current fiscal year. Due primarily to the fact that there was no tax benefit associated with the non-cash goodwill impairment charges in the third quarter, our current year effective tax rate of 43% increased versus 33% last year. Cash flow from operations improved by over $25 million versus last year, due to improved profitability and improved inventory balances. Cash net of debt reached an all-time high of $79.9 million at year-end at $18.2 million increase over the prior year-end. We ended 2016 with the balance sheet in great shape and a strong cash position needed to provide us the flexibility and resources necessary to invest strategically in growing our business, while continuing to pay cash dividends to our shareholders. Now I’ll turn the call back over to the operator for the Q&A sessions. Operator?

[Operator Instructions] our first question comes from the line of George Kelly of Imperial Capital. Your line is now open.

I have a couple of questions for you, first, if I could start with your order book. You mentioned I think in the release and then on the call that you feel good you’re seeing orders for some of your new products really start to pick up. Can you talk, can you give any numbers behind what you’re seeing, what the backlog is or what products in particular are driving that growth?

Well, I can tell you that as of September 30, we did have an increase in open orders versus prior year. It’s hard to say what’s going to happen through this season, since we’re just kind of increasing the mode right now. But our K is going to show an increase in open order above $7 million versus prior year.

And then you have stated that tracks, how things are selling at retail, I believe. Can you say anything just about what you’re seeing subsequent to the election or with old tricks or meaning since the quarter ended?

George since it’s like our low season, I’d hate to read too much in to it. I think there’s - since the election there’s a bit of optimism out there. But again we’re just heading in to our pre-season right now. So I think reports from the retailers are pretty good.

And then another question on, you mentioned the three main strategic priorities for the next several years. And I believe Helen that you said there’s enhanced digital sophistication and you expect big change in the next 18 months or so. Can you give any more detail about will we start to see that in 2017?

Yes, our time table has - we’re kind of staggering. The work we are doing across the businesses, and in ’17 we have planned to get some of our new websites going and working. So you will see some surface during that timeframe.

And then last question and then I can hop back in the queue, but I haven’t seen any acquisitions recently and your balance sheet and cash flow profile would certainly allow for it. Is that less of a strategic priority now or is there still a pipeline that you’re looking at of potential acquisitions?

Well, we’re always looking for strategic acquisitions, and I think I would say that it’s just an - it will always be part of our strategy. But we have a very defined universe encapped for our businesses and so we do evaluate quite a bit. But we’re always looking and we are certainly in the position to do some and as the right acquisitions come about, you’ll see us go after them.

Are there uses, I know your dividend, but are the other more significant uses for your growing cash?

There’s potential other uses. I mean we talk about that very frequently about the balance sheet and how we are at a point at. So right now we feel good about the dividend and as Helen talked about the acquisition path. But believe me we are well aware of the fact that we’ve got a lot of flexibility there.

[Operator Instructions] and I’m showing no further questions at this time. I’d like to hand the call back over to Helen for any closing remarks.

Just want to thank everyone for joining us. If you have any questions, you can call Dave or Pat. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. That does conclude today’s program. You may all disconnect. Everyone have a great day.