This article first appeared on GuruFocus .
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Total Company Sales:Increased 5% versus the prior year quarter.
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Year-to-Date Net Sales:15% higher than the prior year's nine-month period.
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Operating Income:$18.3 million, $11 million higher than the prior year quarter, with approximately $15 million in tariff refunds contributing to the improvement.
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Gross Margin (Q3):Improved to 45.3%, an increase of 7.7 points compared to the prior year quarter, aided by the tariff refund.
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Gross Margin (Year-to-Date):40.6%, up 5.8 points from the prior year-to-date period.
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Operating Expenses:Increased $7 million from the prior year third quarter, due primarily to increased sales volume related costs and variable compensation costs.
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Profit Before Income Taxes (Q3):$23.3 million compared to $10.5 million in the previous year quarter.
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Profit Before Income Taxes (Year-to-Date):$32.2 million compared to a loss of $4.3 million during the previous year period.
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Inventory:Balance at the end of the third quarter was $188.3 million, up about $24.5 million from the previous year third quarter.
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Fishing Business:Results driven by continued healthy demand for Minkota's full lineup of trolling motors.
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Diving Business:Strong sales in regulators and buoyancy compensators helped drive a solid increase in third-quarter sales.
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Camping and Watercraft Business:Faced a challenging quarter due to weakness in marketplace conditions.
Release Date: August 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Total company sales increased 5% in Q3, with year-to-date net sales up 15% versus the prior year.
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Operating income rose significantly to $18.3 million in Q3, up $11 million from the prior year quarter.
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Gross margin improved to 45.3% in Q3, a 7.7-point increase, aided by tariff refunds and cost-saving initiatives.
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Fishing business saw healthy demand for Minn Kota trolling motors, driving strong quarterly results.
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Diving business delivered solid sales growth in regulators and buoyancy compensators, with enhanced digital engagement.
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Balance sheet remains debt-free, and the company continues to pay a meaningful dividend to shareholders.
Negative Points
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Camping and watercraft business faced a challenging quarter due to weak marketplace conditions.
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Excluding tariff refunds, gross margin would have been modestly lower than the prior year due to higher raw material costs.
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Operating expenses increased $7 million in Q3, driven by higher sales volume-related costs and variable compensation.
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Inventory levels rose to $188.3 million, up $24.5 million from the prior year, to support demand.
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No additional meaningful tariff refunds are anticipated, and the evolving tariff landscape poses potential cost impacts.
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Tax rate is expected to be volatile due to a valuation allowance on U.S. income, with full-year tax expense estimated at $5-6 billion.
Q & A Highlights
Q: How did the quarter progress from April to June, and are there any early reads on July performance? A: Helen Leipold, Chairman and CEO, noted that results varied across the business, but the company feels good about the momentum from its innovation plans. While the market remains complex and no forward-looking statements were provided, the company is focused on its strategic priorities and hopes the positive momentum continues.
Q: Can you discuss the impact of pricing actions on fishing revenue? A: Asad Rahman, CFO, stated that pricing was a factor in the quarter. The company implemented strategic pricing where it made sense for its products, carefully considering consumer and demand dynamics to optimize revenue.
Q: How should we think about gross margins going forward, excluding the tariff refund? A: Asad Rahman, CFO, explained that gross margin was flattish excluding refunds. Pricing and cost savings continue to be positive factors, while increasing raw material costs, particularly dynamic electronic component costs, are a headwind. The company's cost-saving efforts are in place to help offset these pressures.
Q: What was the larger factor driving higher operating expenses, and how should we think about them going forward? A: Asad Rahman, CFO, indicated that roughly half of the increase was related to variable compensation costs, with the rest tied to volume-related costs and other expenses. The company continues to manage expenses prudently while investing in key priorities for long-term success.
Q: What is the expected tax rate for the fourth quarter and an early read for fiscal '27? A: Asad Rahman, CFO, noted that due to the valuation allowance on U.S. income, the tax rate will fluctuate quarter-to-quarter. For the full year, the company expects approximately $5 million to $6 million in tax expense.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
