Arctic Cat Announces Fourth Quarter and Year-End Results; Reports Record Revenues for the Year; 1.5 Million Share Repurchase Authorized
THIEF RIVER FALLS, Minn.--May 15, 2001--Arctic Cat Inc. today reported results for the fiscal 2001 fourth-quarter and year ended March 31, 2001.For the fiscal year, net sales increased 7 percent to $530.6 million, compared to $494.9 million last fiscal year. Net earnings grew 10 percent to $27.0 million, or $1.10 per diluted share, in fiscal 2001, compared to adjusted net earnings of $24.5 million, or 96 cents per diluted share, earned during fiscal 2000. Adjusted net income and adjusted net income per diluted share do not include certain costs related to the discontinued personal watercraft (PWC) business. The company recorded a $16.9 million, or 66 cents per diluted share, after-tax charge for these costs in September 1999. Including the effects of the PWC exit and related costs, Arctic Cat reported net earnings of $7.6 million, or 30 cents per diluted share for the year ended March 31, 2000.
Net sales for the fourth quarter rose to $87.6 million versus $84.8 million for the same period last year. The company reported a net loss of $1.0 million, or 4 cents per diluted share, compared to a net loss of $723,000, or 3 cents per diluted share, in the prior-year period.
"We are pleased with our record-breaking revenues and increased earnings for fiscal 2001. These results are in line with our expectations and reflect the overall strong performance of our business during the fiscal year," said Christopher A. Twomey, president and chief executive officer.
"U.S. industry-wide retail sales of snowmobiles increased during the year as a result of the first normal winter snowfall we have seen in four years," said Twomey. "Our snowmobile retail sales outpaced the industry. Sales in our snowmobile parts, garments and accessories business also were strong, reflecting the good snow conditions and increased snowmobile usage."
During the year, Arctic Cat introduced a number of new industry-leading technologies to its snowmobiles such as a computer-controlled shock absorber system and the first commercially available four-stroke snowmobile with significantly lower emissions, noise and increased gas mileage.
Arctic Cat's ATV sales continued to outpace the industry's, again posting double-digit growth during the fiscal year. Said Twomey, "ATV units sales amount to about one-half of total Arctic Cat unit sales as we continue our strategy to lessen the company's reliance on snow-dependent snowmobile sales. During the last quarter of the fiscal year, the ATV growth rate began to slow and most manufacturers, including Arctic Cat, responded with dealer incentives. During this period, Arctic Cat growth still outpaced the industry."
Share Repurchase Program
The Board of Directors has authorized the company to repurchase up to 1.5 million additional shares of its common stock from time to time in open market transactions. This repurchase authorization represents approximately 6 percent of the company's current common shares outstanding and follows three previously authorized share repurchase programs in which the company repurchased and cancelled nearly 6 million common shares. During fiscal 2001, the company repurchased 1.3 million shares of its common stock.
Commenting on the additional repurchase authorization, Twomey said, "Given the continued growth we anticipate in our snowmobile and ATV businesses, we believe that our shares are undervalued. Our board of directors continues to believe that the repurchase of our shares is an excellent use of our cash."
Outlook
Commenting on the outlook for fiscal 2002, Twomey stated: "We are excited about the 2002 ATV model year, which we will kick off in June at our worldwide ATV dealer show. We expect ATV revenues to increase during the next fiscal year and also expect our retail sales to outpace the industry again this year. Based on strong snowmobile retail sales, dealer inventories at four-year lows and snowmobile orders already received, we expect fiscal 2002 snowmobile revenues to increase 10 to 15 percent.
"Due to strong demand for our products, we expect continued record-breaking revenues and increased earnings in the year ahead."
Conference Call
Arctic Cat will host a conference call to discuss the fourth quarter and year-end results at 10:30 a.m. CDT on Tuesday, May 15. A replay of the call will be available from 12:30 p.m. CDT on Tuesday, May 15, until midnight CDT on Thursday, May 17. To access the replay, dial (800) 633-8284, conference ID number 18844626. The conference call also will be Webcast. To access this Webcast, go to the corporate portion of the company's Web site at www.arctic-cat.com, and click on the conference call icon. A replay of the Webcast will be archived on Arctic Cat's Web site following the call.
Arctic Cat Inc. designs, engineers, manufactures and markets snowmobiles and all-terrain vehicles (ATVs) under the Arctic Cat(R) brand name, as well as related parts, garments and accessories. For more information, please visit Arctic Cat's Web site at www.arctic-cat.com.
Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements. This press release contains 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 depending on a variety of factors, including, but not limited to: product mix; competitive pressure on sales and pricing; increase in material or production cost which cannot be recouped in product pricing; changes in the sourcing of engines; warranty expenses; foreign currency exchange rate fluctuations; product liability claims and other legal proceedings in excess of insured amounts; environmental and product safety regulatory activity; effects of the weather; and overall economic conditions and consumer confidence. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, is contained in the Company's filings with the Securities and Exchange Commission.
ARCTIC CAT INC.
FINANCIAL HIGHLIGHTS
(000s omitted, except per share amounts)
Three Months Ended Year Ended
March 31, March 31,
------------------ -----------------
2001 2000 2001 2000
-------- -------- -------- --------
Net Sales $ 87,577 $ 84,798 $530,648 $494,875
Cost of Goods Sold 66,493 68,180 394,228 371,487
Watercraft Inventory Writedown -- -- -- 2,835
-------- -------- -------- --------
Gross Profit 21,084 16,618 136,420 120,553
Selling, General and
Administrative Expenses 24,131 20,737 100,702 96,218
Watercraft Exit Costs -- -- -- 18,627
-------- -------- -------- --------
Operating Profit (Loss) (3,047) (4,119) 35,718 5,708
Other Income:
Interest Income 1,503 1,482 4,563 4,591
-------- -------- -------- --------
Earnings (Loss) Before Income
Taxes (1,544) (2,637) 40,281 10,299
Income Tax Expense (Benefit) (509) (1,914) 13,293 2,678
-------- -------- -------- --------
Net Earnings (Loss) ($ 1,035) ($ 723) $ 26,988 $ 7,621
======== ======== ======== ========
Net Earnings (Loss) Per Share
Basic ($ 0.04) ($ 0.03) $ 1.11 $ 0.30
======== ======== ======== ========
($ 0.04) ($ 0.03) $ 1.10 $ 0.30
Diluted ======== ======== ======== ========
Weighted Average Shares
Outstanding
Basic 23,886 24,943 24,231 25,535
======== ======== ======== ========
23,886 24,943 24,457 25,586
Diluted ======== ======== ======== ========
a) The company implemented a new accounting rule during the fourth
quarter of fiscal 2001. Net sales and cost of goods sold for all
periods presented above have been restated as a result of
reclassifying outgoing freight revenue to comply with the
requirements of Emerging Issues Task Force Issue Number 00-10,
"Accounting for Shipping and Handling Fees and Costs." This
reclassification had no impact on previously reported net
earnings.
b) Fiscal 2000 year-end results include a $16.9 million after-tax
charge, or 66 cents per diluted share, for certain costs related
to discontinued personal watercraft business.