Arctic Cat Reports Fiscal 2009 Second-Quarter Results
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MINNEAPOLIS, MN. October 23, 2008: Arctic Cat Inc. today reported net sales of $204.3 million for the fiscal 2009 second quarter ended September 30, 2008, compared with $205.2 million in the same period last year. Net earnings for the quarter were $16.9 million, or $0.93 per diluted share, versus $13.9 million, or $0.76 per diluted share, a year ago.
For the six months ended September 30, 2008, Arctic Cat’s net sales were $298.2 million compared with $293.1 million in the first six months of last fiscal year. Net earnings were $10.0 million, or $0.55 per diluted share, versus net earnings of $6.8 million, or $0.37 per diluted share, in the prior-year first half.
“Our second-quarter and six-month results primarily benefited from continued growth in our parts, garments and accessories business, and a lower effective tax rate,” said Christopher A. Twomey, chairman and chief executive officer. “Year-to-date, we’ve also seen positive results from the snowmobile dealer inventory-reduction initiatives we took last year. We remain cautious, however, about our prospects in the last six months of our fiscal year, due to the challenging economic climate.”
During the quarter, Arctic Cat announced that Claude J. Jordan joined the company as president and chief operating officer. Jordan brings more than 20 years of experience in senior management positions, most recently with The Home Depot and General Electric.
Review of Results
Arctic Cat’s snowmobile sales in the fiscal 2009 second quarter increased 1 percent to $98.4 million, up from $97.0 million in the prior-year quarter. Year-to-date snowmobile sales grew 10 percent to $119.8 million versus $108.9 million in the first six months of last fiscal year.
During the second quarter, Arctic Cat unveiled three new 2009 model snowmobiles: the Sno Pro 600, M8 HCR and the Z1 Turbo Sno Pro. The Z1 Turbo — which tested faster than a Corvette in the quarter-mile — is the world’s fastest production snowmobile. The company introduced these new models at the Hay Days Grass Drags in Minnesota. Hay Days, an annual grass drag racing event, is the unofficial kick-off of the snowmobile season and said to be the world’s largest snowmobile event, attracting more than 30,000 snowmobile enthusiasts. Arctic Cat was encouraged to see strong interest in its products by attendees of this year’s show.
In the 2009 second quarter, the company reported that ATV sales declined 8 percent to $71.6 million versus $77.5 million in the same quarter last year. For the first six months, ATV sales were down 9 percent to $125.4 million compared with $137.3 million in the prior-year six months.
The growth areas in the ATV market continue to be units with large-displacement engines in both the ATV and side-by-side utility segments. Arctic Cat’s new 2009 model line-up extends its side-by-side Prowler UTV line. The company’s new high-performance Prowler XTZ 1000 combines a side-by-side utility vehicle with an Arctic Cat-engineered 1000cc engine, offering the most powerful UTV available in the industry. Arctic Cat’s new 2009 ATV model Thundercat® 1000 also offers a very competitively positioned product that features the industry’s largest-displacement engine. Additionally, as the first manufacturer to offer a 2-rider ATV vehicle, Arctic Cat builds on its innovative reputation with the new luxury cruiser Thundercat TRV® 1000, which not only has enough power to go anywhere, it can do so in comfort and style, with heated handlebars, passenger handgrips, touring windshield and lockable travel case, among its many available features.
Arctic Cat’s PG&A sales grew 12 percent to $34.3 million in the 2009 second quarter versus $30.6 million in the year-ago period. Contributing to the PG&A sales growth in the quarter were strong pre-season sales of snow-related products. For the six months, PG&A sales rose 13 percent to $53.0 million compared with $46.9 million in the same period last year.
For its fiscal 2009 third quarter ending December 31, 2008, Arctic Cat expects net sales to range between $179 million and $189 million compared with $159.6 million for the same period last fiscal year. The net loss for the quarter is estimated to be between $0.25 and $0.35 per diluted share versus a net loss of $0.58 per diluted share in the prior-year third quarter.
Commented Twomey: “We believe that innovative products will drive retail sales and market share gains. Dealer inventory levels are critical to the overall health of our business and we are confident that last year’s inventory reduction measures, and our strong product line-up, position us well compared to our competitors. We also remain focused on further cost reductions through our strategic sourcing initiatives and leveraging our efficiencies. Despite these positive factors, the current state of the U.S. economy, impacted by weak consumer spending and the global financial crisis, makes it difficult to fully assess the impact on our customers and business. As a result, we are not providing full-year guidance at this time. We will continue to closely monitor the macroeconomic environment, industry trends and dealer inventories.”
A conference call is scheduled for 10:30 a.m. CT (11:30 a.m. ET) today. To listen to the live webcast or replay of this call via the Internet, go to the corporate portion of the company’s website at www.arcticcat.com. To listen to a telephone replay of the conference call, dial 800-405-2236 and enter conference call ID # 11121519. The replay will be available through Thursday, October 30, 2008.