JOHNSON OUTDOORS INC (JOUT)

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 and nine month periods ended July 3, 2026 and June 27, 2025. All monetary amounts, other than share and per share amounts, are stated in thousands.

This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and related notes that immediately precede this section, as well as the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2025 which was filed with the Securities and Exchange Commission on December 12, 2025.

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. 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. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated.

Factors that could affect actual results or outcomes include the matters described under the caption “Risk Factors” in Item 1A of the Company’s Form 10-K for the fiscal year ended October 3, 2025 which was filed with the Securities and Exchange Commission on December 12, 2025 and the following:  changes in economic conditions, consumer confidence levels and discretionary spending patterns in key markets; 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 stemming from changes in U.S. trade policies, tariffs, and the reaction of other countries to such changes; the global outbreaks of disease which may affect market and economic conditions and may have wide-ranging impacts on employees, customers and various aspects of our operations; the Company’s success in implementing its strategic plan, including its targeted sales growth platforms, innovation focus and its increasing digital presence; litigation costs related to actions of and disputes with third parties, including competitors; the Company’s continued success in its working capital management and cost-structure reductions; the Company’s success in integrating strategic acquisitions; the risk of future write-downs of goodwill or other long-lived assets; the ability of the Company’s customers to meet payment obligations; the impact of actions of the Company's competitors with respect to product development or enhancement or the introduction of new products into the Company's markets; movements in foreign currencies, interest rates or commodity costs; fluctuations in the prices of raw materials or the availability of raw materials or components used by the Company; any disruptions in the Company's supply chain as a result of material fluctuations in the Company's order volumes and requirements for raw materials and other components, or the demand for those same raw materials and components by third parties, necessary to manufacture and produce the Company's products including related to shortages in procuring necessary raw materials and components to manufacture and produce such products; the success of the Company’s suppliers and customers and the impact of any consolidation in the industries of the Company's suppliers and customers; the ability of the Company to deploy its capital successfully; unanticipated outcomes related to outsourcing certain manufacturing processes; unanticipated outcomes related to litigation matters; and adverse weather conditions and other factors impacting climate change legislation. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this filing. The Company assumes no obligation, and disclaims any obligation, to update such forward-looking statements to reflect subsequent events or circumstances.

Trademarks

We have registered the following trademarks, among others, which may be used in this report: Minn Kota®, Cannon®, Humminbird®, Jetboil®, Old Town®, Carlisle®, and SCUBAPRO®.

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Overview

The Company is a leading global manufacturer and marketer of branded seasonal outdoor recreation products used primarily for fishing, diving, paddling and camping.  The Company’s portfolio of well-known consumer brands has attained leading market positions due to continuous innovation, marketing excellence, product performance and quality.  The Company’s values and culture support innovation in all areas, promoting and leveraging best practices and synergies within and across its subsidiaries to advance the Company’s strategic vision set by executive management and approved by the Company’s Board of Directors.  The Company is controlled by Helen P. Johnson-Leipold, the Company’s Chairman and Chief Executive Officer, members of her family and related entities.

Highlights

Net sales of $189,731 for the third quarter of fiscal 2026 increased $9,076, or 5%, 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 45.3% compared to 37.6% in the prior year quarter due in large part to tariff refunds received during the current quarter as discussed below. The sales gain and margin improvement contributed to an $11,013 increase in operating income in the current year quarter versus the prior year quarter.

As discussed in "Note 10 - Contingencies," during the third fiscal quarter, the Company submitted claims for refunds of IEEPA tariffs previously paid on imports in fiscal 2025 and early 2026. Refunds received through July 3, 2026 totaled approximately $15,600, including interest. The Company recognized a benefit in Cost of sales on the accompanying Condensed Consolidated Statements of Operations for $15,015 representing the portion of the refund relating to products previously sold.

Seasonality

The Company’s business is seasonal in nature. The third 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.

Results of Operations

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

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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 - Third Fiscal Quarter

Consolidated net sales for the three months ended July 3, 2026 were $189,731, an increase of $9,076, or 5%, compared to $180,655 for the three months ended June 27, 2025. Foreign currency translation had a negligible impact on current year third quarter consolidated net sales compared to the prior year's third quarter consolidated net sales.

Net sales for the three months ended July 3, 2026 for the Fishing business were $149,985, an increase of $9,306, or 7%, from $140,679 during the third fiscal quarter of the prior year. The increase in sales in this segment between quarters was mainly due to a stronger competitive position in the market for Company products and product pricing increases between periods.

Net sales for the Camping & Watercraft Recreation business were $16,432 for the third quarter of the current fiscal year, a decrease of $2,476, or 13%, from the prior year net sales during the same period of $18,908. The decline was driven primarily by the unfavorable impact of continuing weak marketplace conditions for the segment.

Net sales for Diving for the third quarter of fiscal 2026 were $23,313, which increased $2,112, or 10%, compared to net sales of $21,201 for the three months ended June 27, 2025. The sales increase over the prior year third quarter was primarily driven by strong sales in the U.S. and Asian marketplaces. Additionally, foreign currency translation had a favorable impact of approximately 2% on sales in this segment in the current year quarter versus the prior year quarter.

Net Sales - Year-To-Date

Consolidated net sales for the nine months ended July 3, 2026 were $525,146, an increase of $68,493, or 15.0%, compared to $456,653 for the nine months ended June 27, 2025. Foreign currency translation had an impact of less than 1% on net sales of the current year to date period compared to the prior year to date period.

Net sales for the nine months ended July 3, 2026 for the Fishing business were $421,380, an increase of $63,338, or 18%, from $358,042 during the prior year to date period. The increase in sales in this segment between year to date periods was mainly due to sales generated by a stronger competitive position for Company products and product pricing increases between periods.

Net sales for the nine months ended July 3, 2026 for the Camping & Watercraft Recreation business were $45,086, a decrease of $1,125, or 2%, from the prior year net sales during the same period of $46,211 due primarily to the unfavorable impact of a continuing weak end-market for watercraft recreation produc

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise stated, all monetary amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, other than per share amounts, are stated in thousands.

Executive Overview

The Company designs, manufactures and markets innovative, high quality recreational products for the outdoor enthusiast. Through a combination of innovative products, strong marketing, a talented and passionate workforce and efficient distribution, the Company seeks to set itself apart from the competition in its markets. Its subsidiaries operate as a network that promotes innovation and leverages best practices and synergies in the design, production and marketing of their recreational products, following the strategic vision set by executive management and approved by the Company’s Board of Directors.

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Table of Contents

Highlights

The Company’s fiscal 2025 full-year revenues remained essentially flat to the prior year. New product successes in the Fishing segment helped to offset sales declines resulting from the exit of the Company's Eureka! brand in the prior year. Favorable overhead absorption and lower inventory reserve adjustments in the current year contributed to a 1.2 point increase in gross margin year over year. An 8% decrease in operating expenses between years, driven mainly by the $11,173 write-off of goodwill in the prior year, as well as a decrease in promotional spending year over year, contributed to a $27,331 improvement in operating loss in fiscal 2025 from fiscal 2024.

Results of Operations

Summary consolidated financial results from continuing operations for the fiscal years presented were as follows:

The Company’s internal and external sales and operating profit (loss) by business segment for each of the three most recent completed fiscal years were as follows:

See Note 13 to the Consolidated Financial Statements included elsewhere in this report for the definition of segment net sales and operating profit.

Fiscal 2025 vs. Fiscal 2024

Net Sales

Net sales in fiscal 2025 were $592,415 compared to $592,846 in fiscal 2024. Foreign currency exchange had a negligible impact on the current year’s sales versus the prior year.

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Table of Contents

Net sales for the Fishing business increased by $6,821, or 2% during fiscal 2025 from fiscal 2024.  The increase in sales in this segment year over year was mainly due to sales generated by the introduction of new products, particularly in the last half of the current fiscal year.

Camping & Watercraft Recreation net sales decreased $8,564, or 13%, in 2025 from 2024. As previously announced, the Company exited the Eureka! brand in this segment, and completed all remaining sales of Eureka! inventory in the first fiscal quarter of 2025. Excluding the impact of Eureka! sales in the prior year, which accounts for a decrease of approximately $9,432 year over year, sales in this segment increased slightly over the prior year due to success of new Jetboil products introduced into the market by the Company during the year.

Diving net sales increased $1,830, or 2%, year over year. The sales increase was primarily driven by modest improvements in market conditions across certain regions, as well as a favorable foreign currency translation impact on sales in this segment of approximately 1% in 2025 versus the prior year period.

Cost of Sales

Cost of sales was $384,322, or 64.9% of net sales, on a consolidated basis for fiscal 2025 compared to $391,866, or 66.1% of net sales, in the prior year. Incremental tariffs incurred during the current year were, in large part, capitalized on the balance sheet at October 3, 2025. The decrease in cost of sales as a percent of net sales year over year was driven primarily by the sell-off of remaining Eureka! branded product in the prior year at very low margins.

Gross Profit

Gross profit of $208,093 was 35.1% of net sales on a consolidated basis for the year ended October 3, 2025 compared to $200,980, or 33.9% of net sales in the prior year.

Gross profit in the Fishing business increased by $3,451 from the prior year due primarily to the 2% increase in net sales year over year. Material and labor cost increases were largely offset by lower inventory reserves and improved absorption of fixed overhead costs between the periods.

Camping & Watercraft Recreation gross profit decreased by $788 from 2024, where the impact of lower sales volumes was partially offset by an improved product mix in fiscal 2025 after fully exiting the Eureka! brand in early 2025.

The $4,494 increase in gross profit in the Diving segment was largely due to increased sales as well as reduced inventory reserves and selected pricing actions taken in the current year.

Operating Expenses

Operating expenses decreased from the prior year by $20,218. Key drivers of the expense change were an $11,173 write off of goodwill in the prior year, approximately $3,600 of lower deferred compensation costs between years, and a decrease in promotional spending versus the prior year period.

Operating expenses for the Fishing segment decreased by $22,717 from fiscal 2024 levels.  This decrease was due primarily to the $11,173 write off of goodwill in the prior year, as well as approximately $10,000 of lower advertising and promotional spend between years.

Camping & Watercraft Recreation operating expenses decreased by $2,194 from the prior year, mainly due to decreased sales volume related costs between years.

Operating expenses for the Diving business increased by $1,583 year over year due primarily to increased variable compensation costs between periods.

The Company's fiscal 2025 general corporate expenses of $38,612 increased $3,110 from $35,502 in fiscal 2024. Higher variable compensation and health insurance costs over the prior year were partially offset by approximately $3,600 of lower deferred compensation costs due to less favorable market conditions on the Company's deferred compensation plan assets during fiscal 2025. The deferred compensation expenses are entirely offset in "Other (income) expense, net" related to marking the plan assets to market.

Operating Results

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Table of Contents

The Company’s operating loss was $16,191 in fiscal 2025 compared to an operating loss of $43,522 in fiscal 2024.  Fishing operating profit increased by $26,168 from the prior year to a profit of $19,570 due primarily to a goodwill impairment charge in the prior year and increased sales volumes between years, as discussed above.  The operating profit for Camping & Watercraft Recreation was $918 compared to a loss of $488 in 2024 which increase was primarily a result of an improved sales mix of products between periods.  The operating profit for the Diving business was $1,667 in fiscal 2025, up from an operating loss of $1,244 in fiscal 2024, due primarily to decreased materials costs and a favorable product mix between years.

Other Income and Expenses

Interest expense of $224 increased slightly compared to the prior year expense of $152. Interest income of $3,783 decreased from prior year interest income of $4,844 due to the decreased investment balances over the prior year.  Net other income of $3,353 in fiscal 2025 decreased from $8,968 in fiscal 2024.  The current year net other income included market earnings and dividend income on deferred compensation plan assets of $3,415, partially offset by currency losses of $126. The prior year net other income included the gain on the sale of a building of approximately $1,900 and market earnings and dividend income of $7,049 on deferred compensation plan assets, partially offset by currency losses of $385. The dividends and market gains and losses on deferred compensation plan assets recognized in the Consolidated Statement of Operations in “Other (income) expense, net” are offset as compensation expense in “Operating expenses.”

Pretax Income and Income Taxes

The Company realized a pretax loss of $9,279 in fiscal 2025 compared to a pretax loss of $29,862 in fiscal 2024. The Company recorded income tax expense of $25,015 in 2025, which equated to an effective tax rate of (269.6)%, compared to a tax benefit of $3,329 in 2024, which equated to an effective tax rate of 11.1%.  In fiscal 2025, based on projections for the U.S. tax jurisdictions, the Company determined that it was more likely than not that certain deferred tax assets will not be realized and a valuation allowance balance of $25,880 was reported against the net deferred tax assets for the U.S, resulting in the increase in tax expense over the prior year.

Net Income (Loss)

The Company recognized net loss of $34,294, or $3.35 per diluted common share, in fiscal 2025 compared to net loss of $26,533, or $2.60 per diluted common share, in fiscal 2024 based on the factors discussed above.

Fiscal 2024 vs. Fiscal 2023

Net Sales

Net sales in fiscal 2024 decreased by 11% to $592,846 compared to $663,844 in fiscal 2023. Foreign currency exchange had a negligible impact on sales year over year.

Net sales for the Fishing business decreased by $40,586, or 8% during fiscal 2024 from fiscal 2023.  Softer overall consumer demand and increased competitive pressure in the Fishing market contributed to the decline between years.

Camping & Watercraft Recreation net sales decreased $19,439 in fiscal 2024 from 2023. Approximately $4,500 of the decrease in net sales from the 2023 period was related to the previously disclosed sale of the Military and Commercial Tents product lines during the second fiscal quarter of 2023, with the remainder due primarily to general declines in market demand for camping and watercraft products.

Diving net sales decreased $11,441, or 13%, year over year. The sales decrease was due to softening market demand across all geographic regions, partially offset by a favorable foreign currency translation impact on sales in this segment of approximately 1% in 2024 versus the 2023 period.

Cost of Sales

Cost of sales was $391,866, or 66.1% of net sales, on a consolidated basis for fiscal 2024 compared to $419,757, or 63.2% of net sales, in fiscal 2023. The decrease in total cost of sales dollars was consistent with the decrease in sales year over year. As a percentage of net sales, the increase cost of sales between years was driven primarily by the unfavorable absorption of fixed overhead costs as a result of lower sales volumes between periods.

Gross Pr

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