Net sales rose to $238.5 million, up from $229.0 million in prior-year quarter;
Sales driven by snowmobiles and side-by-sides;
North American retail sales increased 17 percent versus year-ago quarter;
$1.70 EPS in second quarter versus $1.80 a year ago;
Company maintains full-year sales and earnings outlook for fiscal 2014
MINNEAPOLIS, MN – October 24, 2013 – Arctic Cat Inc., (NASDAQ:
ACAT)
today reported net earnings of $23.4 million, or $1.70 per diluted
share, for the fiscal second quarter ended September 30, 2013, compared
to prior-year net earnings of $25.0 million, or $1.80 per diluted share.
Net sales in the quarter were $238.5 million, up from net sales of
$229.0 million in the same quarter last year.
Commented Claude Jordan, Arctic Cat chairman and chief executive
officer: “We had strong double-digit sales gains in side-by-sides and
snowmobiles that led to record second-quarter sales, on top of a record
prior-year period. However, ATV sales in North America and Europe fell
short of our expectations in the quarter, and the lower volume reduced
our profitability.”
Jordan added: “We are maintaining our full-year outlook for fiscal
2014, but expect a challenging second half of the year. Arctic Cat
posted outstanding performance in the fiscal first quarter, which is
reflected in first-half sales growth of 6 percent and earnings up 7
percent. We anticipate continued strong dealer demand for side-by-sides
and snowmobiles, and the new Wildcat models that we expect to introduce
in our fiscal second half. In addition, we continue to focus on
operational excellence and cost controls that will enhance our
efficiency and profitability.”
Arctic Cat plans to introduce two new Wildcat pure-sport
side-by-sides in November, as well as the Wildcat 50 Trail model in the
fiscal 2014 fourth quarter.
Arctic Cat’s fiscal 2014 second-quarter financial results compared with the prior-year quarter:
- Net sales grew approximately 4 percent, led by contributions from the Wildcat and Prowler HDX side-by-sides, and snowmobiles.
- North American retail sales increased 17
percent from the prior-year quarter, with retail sales gains in ATVs,
side-by-sides and snowmobiles.
- Gross profit margins were 25.9 percent
compared to 28.0 percent in the prior-year quarter, due to product mix,
Canadian currency impact, and increased sales incentives driven by
double-digit retail sales increases in the ATV/side-by-side business.
Including the lower-margin Yamaha sleds that Arctic Cat is supplying,
combined with the Canadian currency impact, Arctic Cat expects fiscal
2014 gross margins to be approximately 80 basis points lower than the
prior year.
- Operating expenses rose slightly to $25.4
million versus $25.3 million. The company continued to increase
investment in research and development, which was up 29 percent from the
prior-year quarter, to ensure a strong pipeline of new products and
technologies, while maintaining strict cost controls.
- Operating profit was $36.3 million versus $38.8 million in the year-ago quarter.
- Cash and short-term investments totaled
$40.1 million, up $16.1 million versus the same quarter last year. The
company had no debt.
For the six months ended September 30, 2013, Arctic Cat’s net
earnings rose 7 percent to a record $28.8 million, or $2.10 per diluted
share, compared to net earnings of $27.0 million, or $1.95 per diluted
share, in the prior-year quarter. The company’s year-to-date net sales
increased 6 percent to $359.3 million versus net sales of $340.3 million
in the year-ago first six months.
Business Line Results
ATVs/Side-by-Sides – Sales of Arctic Cat’s all-terrain
vehicles (ATVs) and side-by-sides increased 4 percent to $72.7 million,
up from $69.7 million in the same period last year, primarily due to
strong orders for the Wildcat X and the four-seat Wildcat 4 pure sport
side-by-sides.
Said Jordan: “Our side-by-side business performed well in the 2014
second quarter, with continued strong growth in our Wildcat and Prowler
HDX models in North America and international markets outside of Europe.
However, second-quarter sales of ATVs in North America were lower than
we anticipated, combined with ongoing economic headwinds in Europe, both
of which contributed to single-digit increases in our ATV and
side-by-side sales to dealers. On the retail side, we saw strong
double-digit sales gains for our ATV and side-by-side business in the
fiscal 2014 second quarter, due to consumer demand for our new products.
As a result of lower wholesale and higher retail sales, our ATV dealers
now have an improved inventory position that should translate into
increased dealer orders going forward. Additionally, with the new
side-by-side models that we intend to launch in our fiscal third and
fourth quarters, we anticipate solid performance in the second half of
the fiscal year.”
Arctic Cat remains focused on further increasing its ATV/side-by-side
business as a percent of total sales. The company anticipates that this
business will exceed 50 percent of total company sales for the fiscal
2014 full year. During fiscal year 2013, 45 percent of sales were in the
ATV/side-by-side segment, up from 39 percent the previous year. The
company continues to advance its growth strategy through new product
introductions and international expansion.
Since entering the sport side-by-side segment with the Wildcat only a
year and a half ago, Arctic Cat has rapidly extended its Wildcat line
and now offers: Base and Limited models; the four-seat Wildcat 4; and
the high-horsepower Wildcat X and Wildcat 4X. Further, the company has
announced that it plans to begin shipping a 50-inch wide, trail-legal
Wildcat in late fiscal 2014. With a narrower stance, the 50-inch Wildcat
will allow riders access to authorized ATV trails, making it a
versatile option for consumers.
Snowmobiles – Snowmobile sales in the fiscal 2014 second
quarter increased 5 percent to $135.4 million, up from $128.6 million in
the prior-year quarter.
Commented Jordan: “We are pleased with consumers’ early season retail
response to our 2014 model year snowmobile line-up. In addition, our
expanded relationship with Yamaha continues to proceed smoothly. We
expect to begin shipping a larger number of snowmobiles to Yamaha in our
2014 fiscal third quarter.”
For the 2014 model year, Arctic Cat launched 10 snowmobiles,
including the all-new ZR 6000 El Tigre high-performance sled, and new
snowmobile engine options from Arctic Cat and Yamaha through an engine
supply agreement. Arctic Cat also introduced its first designed and
built snowmobile engine, the 6000 C-TEC2, which is a powerful,
lightweight and fuel-efficient 2-stroke that enables the company to
enter the large 600cc snowmobile market segment that now accounts for 18
percent of the snowmobile industry.
Parts, Garments & Accessories – Sales of parts, garments
and accessories (PG&A) in the fiscal 2014 second quarter totaled
$30.4 million, down 1 percent compared to $30.8 million in the
prior-year quarter. Strong growth in parts and accessories was offset by
lower garment sales. Arctic Cat expects its PG&A business to grow
in the remainder of fiscal 2014 through further expansion of its Wildcat
accessories offerings.
Fiscal 2014 Full-Year Outlook
For the fiscal year ending March 31, 2014, Arctic Cat is maintaining
its sales and earnings guidance, but is targeting the lower end of the
guidance range. The company continues to expect earnings in the range of
$3.27 to $3.37 per diluted share, an increase of 13 percent to 17
percent over prior-year earnings of $2.89 per diluted share. The company
anticipates sales in the range of $754 million to $768 million, an
increase of approximately 12 percent to 14 percent versus fiscal 2013.
Arctic Cat’s fiscal 2014 outlook includes the following assumptions
versus the prior fiscal year: core ATV North American industry retail
sales flat to up 5 percent; side-by-side North American industry retail
sales up 15 percent to 25 percent; snowmobile North American industry
retail sales flat to up 3 percent; Arctic Cat dealer inventories,
excluding new products, flat to up 10 percent; achieving slightly lower
operating expense levels as a percent of sales; and increasing cash flow
from operations. The company expects gross margins to decrease by
approximately 80 basis points, due to additional Yamaha snowmobiles that
will be built in Arctic Cat’s factory and, to a lesser extent, the
Canadian currency impact. Most of the Yamaha gross margin impact will be
experienced in the fiscal 2014 third quarter, as Arctic Cat ships a
large number of Yamaha snowmobiles.
“Based on our first-half results and prospects for the balance of
this fiscal year, we remain confident that we will achieve another year
of increased sales, record earnings and enhanced shareholder value in
fiscal 2014,” said Jordan. “We continue to expect our growth to be
fueled by a strong pipeline of innovative new products and technologies,
further market share gains in the growing side-by-side segment and
greater operating efficiencies.”
Conference Call
A conference call is scheduled for 9:30 a.m. CT (10:30 a.m. ET) today. To listen to the live call, dial
877-941-9205. The webcast may be accessed through the investor relations section of
www.arcticcat.com/corporate. In addition, a telephone replay will be available through October 31, 2013, by dialing
800-406-7325, passcode
4646664#.
About Arctic Cat
Arctic Cat Inc. designs, engineers, manufactures and markets
all-terrain vehicles (ATVs), side-by-sides and snowmobiles under the
Arctic Cat® brand name, as well as related parts, garments and
accessories. Its common stock is traded on the Nasdaq Global Select
Market under the ticker symbol “ACAT.” More information about Arctic Cat
and its products is available at
www.arcticcat.com.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for certain forward-looking statements. The Company’s Annual
Report, as well as the Report on Form 10-K, its Quarterly Reports on
Form 10-Q and other filings with the Securities and Exchange Commission,
the Company’s press releases and oral statements made with the approval
of an authorized executive officer, contain forward-looking statements
that reflect the Company’s current views with respect to future events
and financial performance. These forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to
differ materially from historical results or those anticipated. The
words “aim,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and
other expressions that indicate future events and trends identify
forward-looking statements including statements related to our fiscal
2014 outlook, business strategy and product development. Actual future
results and trends may differ materially from historical results or
those anticipated depending on a variety of factors, including, but not
limited to: product mix and volume; competitive pressure on sales,
pricing and sales incentives; increase in material or production cost
which cannot be recouped in product pricing; unexpected delays in the
introduction of new products; changes in the sourcing of engines;
interruption of dealer floorplan financing; warranty expenses and
product recalls; foreign currency exchange rate fluctuations; product
liability claims and other legal proceedings in excess of reserves or
insured amounts; environmental and product safety regulatory activity;
effects of the weather; general economic conditions and political
changes; interest rate changes; consumer demand and confidence; and
those set forth in the Company’s Annual Report on Form 10-K for the year
ended March 31, 2013, under heading “Item 1A. Risk Factors.” The
Company does not undertake any obligation to publicly update or revise
any forward-looking statement, whether as a result of new information,
future events or otherwise.
FINANCIAL TABLES FOLLOW
|
| ARCTIC CAT INC. |
| Financial Highlights |
| (000s omitted, except per share amounts) |
| (Unaudited) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
| Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
| Snowmobile & ATV Units |
|
|
$ |
208,076 |
|
|
|
$ |
198,274 |
|
|
|
$ |
306,990 |
|
|
|
$ |
289,227 |
|
| Parts, Garments & Accessories |
|
|
|
30,449 |
|
|
|
|
30,756 |
|
|
|
|
52,303 |
|
|
|
|
51,114 |
|
| Total Net Sales |
|
|
|
238,525 |
|
|
|
|
229,030 |
|
|
|
|
359,293 |
|
|
|
|
340,341 |
|
| Cost of Goods Sold |
|
|
|
|
|
|
|
|
|
|
|
|
| Snowmobile & ATV Units |
|
|
|
157,748 |
|
|
|
|
146,000 |
|
|
|
|
235,656 |
|
|
|
|
221,556 |
|
| Parts, Garments & Accessories |
|
|
|
19,103 |
|
|
|
|
19,000 |
|
|
|
|
32,803 |
|
|
|
|
32,276 |
|
| Total Cost of Goods Sold |
|
|
|
176,851 |
|
|
|
|
165,000 |
|
|
|
|
268,459 |
|
|
|
|
253,832 |
|
| Gross Profit |
|
|
|
61,674 |
|
|
|
|
64,030 |
|
|
|
|
90,834 |
|
|
|
|
86,509 |
|
| Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Selling & Marketing |
|
|
|
12,116 |
|
|
|
|
12,018 |
|
|
|
|
19,110 |
|
|
|
|
18,825 |
|
| Research & Development |
|
|
|
6,286 |
|
|
|
|
4,867 |
|
|
|
|
11,568 |
|
|
|
|
9,345 |
|
| General & Administrative |
|
|
|
7,019 |
|
|
|
|
8,391 |
|
|
|
|
15,430 |
|
|
|
|
16,465 |
|
| Total Operating Expenses |
|
|
|
25,421 |
|
|
|
|
25,276 |
|
|
|
|
46,108 |
|
|
|
|
44,635 |
|
| Operating Profit |
|
|
|
36,253 |
|
|
|
|
38,754 |
|
|
|
|
44,726 |
|
|
|
|
41,874 |
|
| Other Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Income |
|
|
|
7 |
|
|
|
|
4 |
|
|
|
|
16 |
|
|
|
|
17 |
|
| Interest Expense |
|
|
|
(37 |
) |
|
|
|
(62 |
) |
|
|
|
(40 |
) |
|
|
|
(82 |
) |
| Total Other Income (Expense) |
|
|
|
(30 |
) |
|
|
|
(58 |
) |
|
|
|
(24 |
) |
|
|
|
(65 |
) |
| Earnings Before Income Taxes |
|
|
|
36,223 |
|
|
|
|
38,696 |
|
|
|
|
44,702 |
|
|
|
|
41,809 |
|
| Income Taxes |
|
|
|
12,858 |
|
|
|
|
13,737 |
|
|
|
|
15,869 |
|
|
|
|
14,842 |
|
| Net Earnings |
|
|
$ |
23,365 |
|
|
|
$ |
24,959 |
|
|
|
$ |
28,833 |
|
|
|
$ |
26,967 |
|
| Net Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
$ |
1.75 |
|
|
|
$ |
1.90 |
|
|
|
$ |
2.17 |
|
|
|
$ |
2.06 |
|
| Diluted |
|
|
$ |
1.70 |
|
|
|
$ |
1.80 |
|
|
|
$ |
2.10 |
|
|
|
$ |
1.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted Average Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
|
13,379 |
|
|
|
|
13,152 |
|
|
|
|
13,297 |
|
|
|
|
13,106 |
|
| Diluted |
|
|
|
13,726 |
|
|
|
|
13,828 |
|
|
|
|
13,718 |
|
|
|
|
13,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
| Selected Balance Sheet Data: |
|
|
|
|
|
2013 |
|
|
2012 |
|
|
|
| Cash and Short-term Investments |
|
|
|
|
|
$ |
40,074 |
|
|
|
$ |
23,993 |
|
|
|
|
| Accounts Receivable, net |
|
|
|
|
|
|
105,071 |
|
|
|
|
88,640 |
|
|
|
|
| Inventories |
|
|
|
|
|
|
171,174 |
|
|
|
|
144,736 |
|
|
|
|
| Total Assets |
|
|
|
|
|
|
381,072 |
|
|
|
|
318,536 |
|
|
|
|
| Short-term Bank Borrowings |
|
|
|
|
|
|
0 |
|
|
|
|
0 |
|
|
|
|
| Total Current Liabilities |
|
|
|
|
|
|
174,739 |
|
|
|
|
152,181 |
|
|
|
|
| Long-term Debt |
|
|
|
|
|
|
0 |
|
|
|
|
0 |
|
|
|
|
| Shareholders’ Equity |
|
|
|
|
|
|
201,857 |
|
|
|
|
163,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
September 30, |
|
|
|
|
|
September 30, |
|
|
|
| Product Line Data: |
|
|
2013 |
|
|
2012 |
|
|
Change |
|
|
2013 |
|
|
2012 |
|
|
Change |
| Snowmobiles |
|
|
$ |
135,425 |
|
|
$ |
128,599 |
|
|
5 |
% |
|
|
$ |
157,999 |
|
|
$ |
146,586 |
|
|
8 |
% |
| All-Terrain Vehicles |
|
|
|
72,651 |
|
|
|
69,675 |
|
|
4 |
% |
|
|
|
148,991 |
|
|
|
142,641 |
|
|
4 |
% |
| Parts, Garments & Accessories |
|
|
|
30,449 |
|
|
|
30,756 |
|
|
-1 |
% |
|
|
|
52,303 |
|
|
|
51,114 |
|
|
2 |
% |
| Total Sales |
|
|
$ |
238,525 |
|
|
$ |
229,030 |
|
|
4 |
% |
|
|
$ |
359,293 |
|
|
$ |
340,341 |
|
|
6 |
% |
Source: Arctic Cat Inc.
Arctic Cat Inc. / Timothy C. Delmore, 763-354-1800 / Chief Financial Officer
or
PadillaCRT / Shawn Brumbaugh, 612-455-1754 /
shawn.brumbaugh@padillacrt.com
By press release