Hello, everyone, and welcome to Johnson Outdoors' third quarter 2026 earnings conference call. Today's call will be held by Helen Johnson-Leopold, Johnson Outdoors chairman and chief executive officer. Also on the call is Asad Rahman, chief financial officer. Prior to the question and answer session, all participants will be placed in listen-only mode. After the prepared remarks, the question and answer session will begin. If you'd like to ask a question during that time, please press star, then the number 11 on your telephone keypad. This call is being recorded. Your participation implies consent to our recording this call. If you do not agree in these terms, simply drop off the line. I'll now turn the call over to Andres Batista from Johnson Outdoors. Please go ahead, Mr. Batista.

Good morning, and thank you for joining us for our discussion of Johnson Outdoors results for the 2026 fiscal third quarter. If you need a copy of today's new release, it is available on our website at johnsonoutdoors.com under Investors 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 any additional questions following the call, please contact Asad Rahman or myself. It is now my pleasure to turn the call over to Helen Johnson-Leopold.

Good morning, everyone. First of all, I would like to share that Asad Rahman, our new chief financial officer, joined Johnson Outdoors on June 30th. This follows a planned retirement later this year of our longtime CFO, Dave Johnson, and we thank Dave for his many years of service and contributions to the company. I'm excited to have Asad on the call with us today. I'll begin by sharing perspective on the third quarter and year-to-date results, as well as give an update on each business. Asad will review the financial highlights, and then we will take your questions. The strength of our market-leading brands helped us deliver solid third-quarter results, with total company sales increasing 5% versus the prior year quarter. Operating income was $18.3 million, $11 million higher than the prior year quarter, with approximately $15 million in tariff refunds received, contributing to the improvement. Year-to-date, our net sales were 15% higher than last year's nine-month period, with operating income and gross margin also up for the fiscal year-to-date period. We are pleased with the results we delivered this quarter and the continued progress on our strategic priorities of innovation leadership, digital and e-commerce excellence, and operational efficiencies. In our fishing business, Minn Kota continues to be the leader in trolling motors, and the quarter's results were driven by continued health healthy demand from Minn Kota's full lineup of trolling motors we are pleased with the momentum of our fishing portfolio as always we remain focused on investing in innovation and delivering differentiated technology that enhances the experience of the anglers worldwide in our diving business strong sales and regulators and buoyancy compensators help drive a solid increase in third quarter sales digital engagement continues to play an increasingly important role, enhancing connectivity between our ScubaPro brand, retail partners, and consumers. Our focus remains on enhancing brand visibility, improving consumer engagement, and supporting our retail partners around the world. Together, these initiatives strengthen the foundation of the business and underscore the enduring value of the ScubaPro brand. Finally, our camping and watercraft business faced a challenging quarter, primarily due to weakness in marketplace conditions Jeff Boyle remains a leader in camp cooking and we're focused on capturing the many opportunities we see to further strengthen and expand the brand with our old town brand our portfolio of innovative high-quality watercraft continues to resonate with consumers and we remain committed to building on those strengths to drive sustainable growth over time overall our results reflect strength of our portfolio and the progress we are making against our strategic priorities by remaining focused on innovation expanding our digital and e-commerce presence and driving operational efficiencies we are positioning the business to perform through a range of market conditions and create long-term value now I'll call the call I will turn the call over to Assad for more details on the financials Thanks, Helen.

Good morning, everyone. Gross margin for the third quarter improved to 45.3%, an increase of 7.7 points compared to the prior year quarter. The tariff refund of approximately $15 million contributed to this improvement. Excluding this benefit, gross margin would have been modestly lower than the prior year due to higher raw material costs. Looking ahead, we do not anticipate additional meaningful tariff refunds, and as the tariff landscape continues to evolve, we remain vigilant in managing potential cost impacts and are closely monitoring developments. Operating expenses increased $7 million from the prior year third quarter, due primarily to increased sales volume-related costs as well as increased variable compensation costs. Profit before income taxes for the third quarter was $23.3 million compared to $10.5 million in the previous year quarter, driven mostly by the factors I just mentioned. During the quarter, we increased inventory levels to support sales demand. Our inventory balance at the end of the third quarter was $188.3 million, up about $24.5 million from the previous year third quarter. Year-to-date, gross margin is 40.6%, up 5.8 points from the prior year-to-date period. Tariff refunds, pricing actions, improved overhead absorption, and cost-saving initiatives more than offset higher material costs to drive margin improvement in the current year-to-date Our ongoing strategic cost-savings program remains critical and continues to deliver meaningful benefits to our bottom line. Profit before income taxes on a year-to-date basis was $32.2 million compared to a loss of $4.3 million during the previous year period, which resulted in an increase of approximately $36.5 million as a result of the strong gross margin improvement mentioned earlier. Looking ahead, we remain focused on actively managing the business to balance near-term pressures while continuing to invest in priorities that support sustainable growth. 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 May. Now I'll turn the call over to the operator for the Q&A session.

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

Good morning, and thanks for taking the questions. It's really nice to see the results, especially in fishing and diving. So maybe first we could just talk about how the quarter progressed from April to June and any early reads so far how July was?

You know, we had varied results, you know, across the business, but we feel good that our plans for innovation have kicked in. But, you know, the market is very complex. We're not going to give any forward-looking statements, But, you know, the momentum is good and we're keeping focused on strategic priorities. So, you know, hopefully things continue.

Okay, got it. And then can you just talk about the pricing actions and the impact they had on the fishing revenue?

Pricing was a factor this quarter. And we did strategic pricing where it made sense for our products, keeping in mind the consumer and demand dynamics.

Understood, right. And then, so as you mentioned, the gross margin, excluding the tariff-free fund, came in just slightly below, relatively in line with a year ago. How do we think about gross margins here kind of going forward? Maybe if you could just go over the various puts and takes that we should be mindful of.

Yeah, gross margin, as you mentioned, was plattish, excluding refunds. Pricing and cost savings continue to be a good factor for us. Increasing raw material costs is the headwind. We, like many companies, electronic industry component costs are dynamic for us, and that's something we are monitoring. but it is a good thing that our cost savings efforts in place are there to help offset that.

Got it. Understood. Okay. And then just switching gears to the operating expenses. So they did come in higher than what we had expected and we're up 11.5% from last year. I know you touched on this a little bit as far as the increased sales and marketing costs as well as variable compensation expenses. If we were to separate those two, what was the larger factor driving the higher operating expenses? And then just broadly speaking, how should we think about operating expenses going forward?

Yeah, roughly half of that was related to the variable compensation cost. The rest was related to volume-related costs and other expenses. we continue to manage our expenses prudently while investing in key priorities that are the right things to set us up for long-term success.

Got it. All right. And then lastly, for me here, so, you know, the tax rate has jumped around quarter to quarter so far this year. Any kind of ballpark estimate, how to think about the tax rate for the fourth quarter and any perhaps early read for fiscal 27 as to how to think about the tax rate?

Yeah, because of the valuation allowance on the U.S. income right now, we knew that the tax rate would be up and down each quarter. To think of it practically for the full year, it's going to be about five to six billion dollars of tax expense for the year.

Okay, that's very helpful. All right, well, thank you very much and best of luck. Thank you.

Thank you. I'm showing no further questions at this time. I'll And I turn it back to Helen Johnson-Leopold for closer remarks.

Helen Johnson- Thank you all for joining us, and have a good day. Thank you.

Thank you for your participation in today's conference. As this concludes the program, you may now disconnect.