SCUBA Industry - ScubaPro as a Proxy

[Cert1967]

There is more to the picture than the last nine months at JOUT/SP.

Reviewing JOUT-SP results from 2014-2019

The business is really small. At ~$75m, considering their brand awareness, global reach, their sales are modest. Compared to most consumer recreational segments - unless one uses a niche market, say ice-climbing - they are tiny.

The six-year trend is negative and will get worse in 2020 - both sales and profits.

SP's unit sales? An easy case to make that they have declined during this time period.

For the industry insiders on the forum - are these trends reflective of the industry as a whole?

BTW - how did the SeaBear deal work out?

 

[Cert1967]

As we hear daily, 'circling back'

to JOUT results....

How's JOUT's stock performing? Quite well

• Up ~70% in the last six months
• Up over 540% in the last five years
  • Outperforming IXIC at ~ +175%
  • And its peer reference IWM at ~ +110%

And the Diving Segment of JOUT, year end ~OCT? Not so well.

• Diving Net Sales / Operating Profits (rounded)
  • 2020, $61m, -2.6m
  • 2019, $76m, +3m
  • 2018, $79m, +2.8m
  • 2014, $80m, +3.6m

JOUT is primarily a 'fishing company', with 75% of sales coming from this category.

Diving accounts for ~10% of sales

Capital Expenditures - 2020

• Fishing, ~82%
• Diving, ~6%

FY2020 vs, FY2019

• "Diving net sales decreased $15,433, or 20%, year over year. The decrease is largely due to the effects of COVID-19 on demand globally due to restrictions in destination travel and tourism."
• "The $8,467 decrease in gross profit in the Diving segment was due primarily to decreased sales volumes during fiscal 2020 as compared to the prior year."
• "Operating profit for the Diving business decreased by $5,619 < >."
• "Growth in the US market was more than offset by declines in the Asia market and foreign currency translation, which negatively impacted sales by 3% in 2019 versus the prior year period.

Q1

• "Net sales of $165,667 for the first quarter of fiscal 2021 increased $37,613, or 29%, from the same period in the prior year, reflecting increased sales volumes across all businesses, except Diving, mainly attributable to increased participation in outdoor recreation activities as a result of social distancing and other indoor activity restrictions related to the COVID-19 pandemic."
• "Our customers’ inventory levels, were drawn down during the past fiscal year as consumers purchased related products, and accordingly, we experienced strong orders from our customers in the fiscal 2021 first quarter to fill their pipelines in anticipation of the fiscal 2021 warm-weather recreational season."

On to Q1, ending JAN 2021 vs previous year Q1

• Sales, 14M v 16M
• Profits, -341 v +205

IF JOUT were not a closely held company, one might speculate that they would sell the diving segment and push the capital to the fishing segment.

All things considered, the diving segment held better than might have been expected, having a minimal effect on sales/profits.

Good for the dive industry?

• Likely continuation of the consolidation trend - accelerated by online and shop closures
• Perhaps industry consolidation will help reverse the no growth dive biz?

The Risk Ahead - in the diving segment? IMO ...

• Asia, the only geographic area where the dive industry expected significant growth in the next five years - pre virus.
• USA/Europe - will divers return to LDS/Online and drive shops to increase orders?

 

[Wookie]

I was speaking to a dive shop in Key West this morning. They are doing record trips to Dry Tortugas, which is a $2150 day trip, running in seas I wouldn't take the Spree out in, and killing it. His 2020 numbers are 70% higher than his 2019 numbers, and 2021 is on track to exceed by an additional 50%. It's specifically big huge ticket trips that are making the difference.

 

[wetb4igetinthewater]

I was speaking to a dive shop in Key West this morning. They are doing record trips to Dry Tortugas, which is a $2150 day trip, running in seas I wouldn't take the Spree out in,

Bigger boat for taking the increased risk? Or just eff it, there's money to be made? Is $2150 a higher prices due to lowered boat capacity? I saw that a lot on Maui in January, and I opted to do a lot of shore diving with folks I met on the Maui Mantas FB group.

 

[Wookie]

Bigger boat for taking the increased risk? Or just eff it, there's money to be made? Is $2150 a higher prices due to lowered boat capacity? I saw that a lot on Maui in January, and I opted to do a lot of shore diving with folks I met on the Maui Mantas FB group.

Spree was 100 feet long. We charged $7000 a day. Their boat is 32 feet and runs 35 knots.

 

[wetb4igetinthewater]

Spree was 100 feet long. We charged $7000 a day. Their boat is 32 feet and runs 35 knots.

I just laughed reading that. You certainly answered my question!

So $2150 is the whole boat? As per person, that's a pricey dive (though some people, not me certainly, can afford it).

 

[Wookie]

I just laughed reading that. You certainly answered my question!

So $2150 is the whole boat? As per person, that's a pricey dive (though some people, not me certainly, can afford it).

Whole boat, 1-6 people. I asked, the majority of their customers are couples.

 

[OTF]

Looking to the future though, there could very well be a big boom/bounce back of demand as people (even those who weren't regularly spending money on scuba) want to travel, experience new things, and do things they couldn't during the pandemic.

 

[wetb4igetinthewater]

Hasn't the entire industry been fairly flat/slowly shrinking with the exception of the Asian market (driven largely by China? - that's a guess).

Now my observations are statistically insignificant, but I have seen the trend that properly trained open water divers continue with more con ed than those taught on the knees. I don't want to rat hole this discussion on that topic, but I just throw it out there as being part of the problem.

With tourism shut down mostly worldwide, I expect it to take a few years for the scuba industry to recover to pre covid levels.

 

[Cert1967]

Hasn't the entire industry been fairly flat/slowly shrinking with the exception of the Asian market (driven largely by China? - that's a guess).
Now my observations are statistically insignificant, but I have seen the trend that properly trained open water divers continue with more con ed than those taught on the knees. I don't want to rat hole this discussion on that topic, but I just throw it out there as being part of the problem.
With tourism shut down mostly worldwide, I expect it to take a few years for the scuba industry to recover to pre covid levels.

You have to sign the folks up before you can debate the customer value proposition vs. training methods.

Interesting that when locked up, folks went fishing with lots of newly purchased gear.

If they decided to dive locally they sure didn't buy much new gear.