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 record high sales and profits this year.

Our flagship Minn Kota and Humminbird brands exceeded expectations on every measure, building on a legacy of success through pioneering innovation which has strengthened our brand equities, improved shares and enhanced margins, and we have another exciting and efficient product lined up in 2017, which includes the revolutionary Minn Kota All-Track trolling motor.

The All-Track is the first ever electric cable steered motor providing pedal control, fishing enthusiast a breakthrough steering and navigation features at the tap of a foot.

Our patent pending All-Tracks is the most technologically advanced cable steering trolling motor ever which was named the best boating accessory and awarded the coveted overall Best of Show at this years’ ICAST, the world’s largest and most prestigious fishing trade and consumer show.

Bringing the vision of All-Tracks to market was a major technical achievement and big news for best anglers who prefer foot pedal mode of control to keep their hands-free position. This is a large fishing consumer audience who’ve been eager to have the edge over the fish that wireless connectivity out on the water provides.

Now for the first time they can have the edge Minn Kota’s pioneering i-Pilot and i-Pilot Link in fishing enthusiasts everywhere else. In Humminbird, we are continuing to drive market place momentum with patented side imaging the old standard of sonar technology with the expanding HELIX series fish finders.

The new HELIX10 with its ultra-bright screen clarity gave Humminbird its sixth consecutive Best of Electronics Award at ICAST in August, and in 2017 we made the best even better with Hummingbirds’ exclusive mega side imaging and mega down imaging, which launched fish finding technology in to the megahertz range for the first time ever.

The quantum leap and its frequency provides the greatest underwater clarity, detail and definition available. Both will be available in new second-generation HELIX series from small to large screen models. Fishing is our largest and most profitable business and we are investing to enhance and sustain our technology and market leadership.

Innovation has also been central to the turnaround in our watercraft recreation business which is now on a positive profitable growth trajectory. Through in-depth consumer and market research we uncovered a hot insight that enabled us to make digital waves in the kayak fishing segment with the Old Town Predator series of fishing boats.

In the last four years, Old Town Predator fishing boats have captured three best boat honors at ICAST, the latest at this year’s show for the Predator PDL, our first peddled drive kayak for the fast growing peddle kayak fishing segment.

The patent pending Old Town Predator PDL offers the unique high ratio, propeller drive system which was years in development because we kept the bar higher to deliver the best pedal fishing experience possible.

As a result, the PDL is the most comfortable easiest pedaling boat with the greatest maneuverability and stability for fishing or just for cruising around. We are pleased by the progress in this business. More work lies ahead to ensure we maximize our watercraft recreation brands, innovation and growth potential long term.

The same is true in our camping and hiking business, where Jetboil has (inaudible) became cookware market place delivering strong top line and bottom line growth to outpace the competition and gain share in a market that has doubled in size over the past two years. Jetboil has been a great addition to our camping portfolio.

In addition to the obvious synergies and complimentary distribution strengths with Eureka, Jetboil’s proprietary patented FluxRing technology and expertise has expanded our innovation horizons.

This year’s new Genesis is the world’s first base camp dual burner cooking system in one easy-to-carry travel bag and true its name, the Genesis signals the beginning of a new generation of outdoor cooking solutions to meet the changing wants and needs of a new generation of foodies who like to enjoy the great outdoors and great food at the same time.

At the same, we are repositioning the Eureka brand against new emerging camp consumer targets and focusing innovations on products customized to meet their unique needs and wants. Eureka is a heritage brand known by children and adults of all ages with a legacy in American camping that dates back more than a 100 years.

We feel good about our plans to build on that legacy to ensure an even stronger, better future for Eureka. In 2017, negative external pressures on the global dive market intensified.

Positive trends in North America and key Asia dive markets were eclipsed by the continued slide in Middle East sales and unfavorable currency exchange primarily out of Europe, resulting in a disappointing year in diving.

Diving has been one of our largest and most profitable units and we are taking action to turn the tide on performance going forward. First, SCUBAPRO is the largest and most respected dive brand in the world, and we have now consolidated all product offerings under the SCUBAPRO banner.

This singular brand focus ensures we can fully leverage the power of SCUBAPRO brand equity to drive targeted share gains. Second, identify, evaluate and implement new more effective go-to-market and distribution months.

Third, innovate, innovate, innovate, divers crave the latest and greatest and our top priority is delivering against that need better than the competition. SCUBAPRO’s heritage is in core life support products notably buoyancy compensators or BC’s and underwater breathing regulators. New for 2017 is what’s being called a game changer, GC.

The SCUBAPRO Hydros Pro, the Hydros Pro is a light weight, comfortably molded to the body and grips to the wetsuit so it never slides under the water. It’s convertible for either tropical or cold water diving and doesn’t absorb water so it dries in minutes.

Unveiled at DEMA just last month, it’s already been heralded as Product of the Year in [Scuba news]. Also new in 2017 is the SCUBAPRO 620 TI regulator, a new ultra-light, ultra easy breathing regulator.

Our top priority is to deliver is to deliver the same high level of innovation in the all-important dive computer segment with investments in new technology and enhance technical capability. We are moving forward aggressively with urgency in diving and look for improved performance overtime.

Looking ahead, our long term plan focuses on raising the bar in each business to ensure our brands are strong, our businesses are healthy and Johnson Outdoors continues to be thriving as a sustainable enterprise. Our three key strategic planned priorities are one; keeping our finger on the pulse of the consumer.

Outdoor rec markets and consumers are dynamic and constantly changing which is why we are using an array of market research, message and analytical tools to stay on top of quickly evolving consumer trends needs and expectations.

Consumer insights are innovation guide post, helping us identify the best targets and the best new product ideas with the greatest potential for success. Just as importantly these insights shape our advertising, promotions, displays and online presence, so we are wholly in touch with and in sync with our target consumer.

A deeper, richer understanding of our consumer is critical to wining in a highly competitive market place, nothing is more important. Number two, revamping our innovation process.

We are taking our new product development process to a world class level to consistently deliver even bigger new product success, being more disciplined and more fact based in our decision making and involving consumers every step along the way from concept to commercialization and beyond.

Innovation is our life blood, the key to our ability to deliver sustained profitable growth. Three, enhance digital sophistication. For most consumers the projects journey begins online.

We are working to be more connected and better connected to build stronger, deeper relationships with consumers along that journey across the board from websites to social media to e-commerce and more. We’re transforming our consumer’s experience with our brand and our company. Over the next 18 months big changes are in store.

With planning and preliminary execution phases under our belt, we are now moving forward with a heightened sense of urgency to quicken the pace of change in all three priority areas. Targeted strategic investments will continue over the next two years with a goal of delivering accelerated profitable growth in the future.

We are very excited by the future we see for Johnson Outdoors and confident in our plans and ability to make it happen. Now I’ll turn things over to Dave for comments and financial over view.

Dave?.

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..