Hello everyone and welcome to the Johnson Outdoors First Quarter 2026 Earnings Conference Call. Today's call will be led by Helen Johnson Leopold, Johnson Outdoors Chairman 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. If you would like to ask a question during that time, please press star, then the number 11 on your telephone keypad. The call is being recorded. Your participant implies consent to our recording this call. If you do not agree to these terms, simply drop off the line. I'll now turn the call over to Pat Penman from Johnson Outdoors. Please go ahead, Ms. Penman.

Good morning, and thank you for joining us for our discussion of Johnson Outdoors results for the 2026 fiscal first quarter. If you need a copy of today's news release, it is available on our website at johnsonoutdoors.com under Investor Relations. I also need to remind you that this conference call may contain forward-looking statements. These statements are made on the basis of our current views and assumptions and are not guarantees of future performance. Actual events may differ materially from those statements due to a number of factors, many beyond Johnson Outdoors' control. These risks and uncertainties include those listed in our press release and filings with the Securities and Exchange Commission. If you have additional questions following the call, please contact Dave Johnson or myself. It is now my pleasure to turn the call over to Helen Johnson-Leopold.

Good morning, everyone. I'll begin by sharing perspective on our start to fiscal 2026, as well as an update on the strategic priorities for our businesses. They will review the financial highlights, and then we'll be happy to take your questions. In the first quarter of fiscal 2026, we saw markets stabilize and solid reception to our new products. That combination helped drive double-digit growth in the quarter, which is encouraging given that this quarter is typically a slower period as we ramp up for the primary selling season. Additionally, the ongoing hard work we've been doing to improve our profitability has been showing results. Our operating loss for this first quarter was much improved versus the prior year quarter. While there are still uncertainties in the broader environment, we're encouraged by how the fiscal year has started and feel good about the execution of our plans to accelerate the growth of our business and brands. Starting with fishing, both our Minn Kota and Hummingbird brands delivered solid performance in the quarter with the category benefiting from improved trade dynamics. Demand remains strong for Hummingbird's Explore Series and Megalive 2 Fish Finders, which launched last fiscal year, and we saw healthy demand across Minn Kota's full lineup of trolling motors. Turning next to Camping and Watercraft, this is an area where our investments in digital and e-commerce are really paying off. Across Jetboil and Old Town, we've been focused on meeting consumers where they are, which is online, and making it easier for them to discover and purchase our products. These efforts help drive growth in the quarter. Both Old Town and Jetboil remain strong leaders in their respective markets. Jetboil continues to see strong demand for its fast-boiled cooking systems, which has exceeded our expectations. Finally, in diving, improved conditions across the global markets and our innovation helped drive an increase in sales for the quarter. We continue to see positive momentum for SCUA Pro's new Hydros Pro 2 product that we began shipping in December. Hydros Pro 2 builds on the award-winning legacy of our original Hydros Pro, incorporating meaningful innovation of comfort, fit, and performance needed in the buoyancy control device. Digital engagement is becoming increasingly important in diving as well, from educating divers on new technologies to supporting dealers with better digital tools and content. We see this as another opportunity to strengthen the connection between our products, our retail partners, and consumers. Overall, we are pleased with the start of fiscal 2026. While it's still too early to predict how the rest of the fiscal year will unfold, Our priorities remain clear across all our businesses, maintaining a strong and robust innovation pipeline, building and growing momentum in digital and e-commerce, and continuing to improve product costs and operating efficiency with our cost savings initiatives. These are the right drivers to position Johnson Outdoors for sustainable growth and long-term success. Now, I'll turn the call over to Dave for more details on financial.

Thank you, Helen. Good morning, everyone. Loss before income taxes for the first quarter was $1.3 million compared to a pre-tax loss of $18.9 million in the previous year quarter. The improvement is driven mostly by revenue growth and improving margins. Gross margin for the first quarter improved to 36.6%, up 6.7 points from the prior year. Overhead absorption from higher volumes was the main driver of the improvement in gross margin. Additionally, price increases and our ongoing progress on cost savings initiatives helped offset increases in material costs. Operating expenses increased $2.1 million from the prior year first quarter, due primarily to increased sales volume-related expense, partially offset by decreased warranty expense. Tax expense for the quarter was about $2 million, driven mainly by an adjustment related to our U.S. valuation allowance on deferred tax assets. We continue to make good progress on our inventory levels. Our inventory balance at the end of the first quarter was $183.9 million, down about $17.7 million from the previous year quarter. I want to highlight that our balance sheet remains debt-free, and we continue to pay a meaningful dividend to shareholders, with the board approving our most recent dividend announced in December. We remain confident in our ability and plans to create long-term value for shareholders. Now, I'll turn the call over to the operator for the Q&A session.

Thank you. At this time, we'll conduct a question-and-answer session. As a reminder to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. I will compile the Q&A roster. And our first question comes from the line of Anthony Labienzinski of Sidoti. Your line is now open.

Thank you, and good morning, everyone. And, you know, certainly a great start to the fiscal year. and thanks for taking the questions. So first, just general kind of question in terms of pricing versus unit volumes. I don't need specific numbers, but just kind of maybe if you just talk about what you saw as far as pricing versus unit volumes, that'd be a good start.

Well, yeah, most of the increase in the quarter was unit volume driven, but we did take pricing across the businesses to react to the cost increases we had. But I would say most of the increase we're seeing is unit volume related.

That's encouraging. Yeah, thanks, Dave. So you guys have for years focused strongly on innovation. Can you share broadly as far as your sales are concerned, what's coming from new product versus a few years ago? Has there been a meaningful change in terms of the new product component of your sales?

You know, I mean, innovation has always been critical for us, and we have been focusing on improving our success rate. So, you know, competition is strong, and our main way of maintaining leadership is innovation. So I would say we continue to make it stronger. and I don't know about the, Dave, you can comment on the percent of volume, but it truly is the

driver of growth. Absolutely, and we've seen improvement in our new product success over the last couple of years. I think, you know, during the COVID cycle, you know, that may have come down a little bit, but we're seeing improvement in that area. Gotcha, thanks. And then you also

talked about the growth in the e-commerce channel. Can you share with us, you know, what percentage of your revenue is now related to e-commerce and do you guys have a goal in mind as far as what you want to get to in the next few years? Well, you know, what we can say is that

it's the fastest growing channel we have and it's definitely expansive growth for us. But, you know, our goal is to continue to grow that at a faster pace than across our businesses. It's a key contributor to growth year on year.

Gotcha. And then so you've had a great start here to the fiscal year, strong sell-in to retailers in the December quarter. What is your sense now about the current trade inventory levels?

Well, we were glad that they, when we said stabilized, it's more that the trade was at a good position from an inventory standpoint to react to good selling. We had a good selling during the first quarter, and so they are in a good position. Hopefully we get the consumer takeaway as the season begins. So I think that the trade is in a healthy position right now.

Okay, that's good to hear. You've done a lot with your cost savings efforts, and it's clearly evident in the gross margin improvement. I know there was some fixed cost absorption component to that as well. But as it relates to the cost savings initiatives, should we expect more to come on that program as we look forward to the rest of the fiscal year?

Yeah, it's a key strategy for us going forward, especially in these volatile times with the supply chain. So it'll be critical for us to continue to work on optimizing product costs, being as efficient as possible. We've got a whole slew of initiatives that we're working on to make that happen.

Okay. And then in terms of the warranty expense, how significant was that as far as the adjustment to the OPEX?

Yeah, I mean, it was probably less than a point of the operating expense percentage going down. But it did come down in the quarter, so we wanted to point that out.

Gotcha. Okay. That makes sense. And lastly, for me, Dave, you did touch on the tax expense, which we were not expecting for the quarter. going forward, what's the, you know, where should we expect the tax rate to fall for the

balance of the fiscal year? Yeah, I mean, the challenge for us is, you know, just the profits in the geographies in which we serve. So, we've got, you know, the valuation allowance in the U.S. And as we make money in the U.S., you know, that won't, we won't have tax benefit or expense on that because it's all reserved for us. So, the tax rate will be kind of wonky going forward until we can kind of stabilize our profits.

Okay, gotcha.

All right, well, thank you very much and best of luck.

Thank you. Thanks, Anthony. Thank you. I'm showing no further questions at this time. I'll now turn it back to Helen Johnson-Leopold for closing remarks.

Okay, just want to thank everybody for joining us and have a great day.

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