Arctic Cat Reports Record Revenues
THIEF RIVER FALLS, Minn.--May 15, 2002--Arctic Cat Inc. :| -- | Fourth-quarter net sales increase 24 percent |
| -- | Full-year net sales up 11 percent |
| -- | Diluted EPS up 9 percent in fiscal 2002 to $1.20 versus $1.10 |
Arctic Cat Inc. today reported results for the fourth-quarter and fiscal year ended March 31, 2002.
For the fiscal year, net sales increased 11 percent to $556.1 million versus $502.4 million last fiscal year. Net earnings grew 6 percent to $28.6 million, or $1.20 per diluted share, compared to net earnings of $27.0 million, or $1.10 per diluted share, for fiscal 2001.
In the fourth quarter of fiscal 2002, net sales grew 24 percent to $99.3 million versus $80.2 million for the same period last year. The company reported a net loss of $1.8 million, or 8 cents per diluted share, compared to a net loss of $1.0 million, or 4 cents per diluted share, in the 2001 fourth quarter.
"We are pleased to report another year of record sales and increased earnings," said Christopher A. Twomey, president and chief executive officer. "Strong demand for Arctic Cat snowmobiles and ATVs drove sales to record levels in fiscal 2002. The 24 percent growth in fourth-quarter sales was driven primarily by a 55 percent increase in ATV sales over the same period a year ago."
During the quarter, the company repurchased 52,000 shares of common stock, bringing the total shares repurchased in fiscal 2002 to 675,000. Since 1996, Arctic Cat has repurchased over seven million shares under three share repurchase authorizations. The company has approximately one million additional shares remaining under its current repurchase authorization and plans to continue to purchase shares from time to time in the market.
Business Line Results
Sales of ATVs (all-terrain vehicles) grew 55 percent in the 2002 fourth quarter to $71.6 million versus $46.3 million in the same period last year, primarily due to the timing of shipments. For fiscal 2002, ATV sales rose 12 percent to $205.2 million.
"We are encouraged by the continued market-share gains we've made in the ATV business," said Twomey. "Industry-wide ATV retail sales in the United States grew at double-digit rates for the ninth consecutive year and Arctic Cat again outpaced the industry growth as we have done every year since entering the ATV market in 1996. We continue to add new models and new dealers to further penetrate this growing market."
Snowmobile sales in the 2002 fourth quarter were $4.7 million versus $6.4 million for the same period last year due to poor snow conditions across much of the East and Midwest. However, year-to-date snowmobile sales increased 14 percent to $262.9 million, as a result of strong early season orders.
Commented Twomey: "Although wholesale sales of Arctic Cat snowmobiles were strong throughout the year, like the rest of the industry, our retail sales felt the impact of the poor snow conditions. As a result, we expect wholesale sales of Arctic Cat snowmobiles will be lower in fiscal 2003. This weather related decrease is particularly disappointing since the 2003 model lineup is the strongest in our history."
Sales of parts, garments, and accessories fell 17 percent to $22.9 million in the 2002 fourth quarter, driven by the lack of snow. For fiscal 2002, increased ATV parts and accessories sales offset the decline in snowmobile related parts, garments and accessories sales, resulting in flat sales of $88.0 million for the fiscal year.
Outlook
"Our goal is to deliver 10 percent earnings per share growth in fiscal 2003," said Twomey. "We anticipate that our growth will come from a 10 percent increase in ATV sales, as we continue to outpace the market's growth and gain share. We also expect a 10 percent increase in parts, garments and accessories sales. Snowmobile sales are expected to decline 7 to 10 percent. In addition, we have identified a number of opportunities to decrease operating expenses in the upcoming year in order to help us achieve our EPS goal."
The company currently anticipates 2003 first-quarter net sales will be in the range of $73 million to $78 million, compared to $77.5 million for the same period last year. Net earnings for the quarter is estimated between 5 to 8 cents per diluted share versus 8 cents per diluted share in the prior-year quarter.
For the fiscal year ended March 31, 2003, Arctic Cat anticipates net sales in the range of $556 million to $570 million. Diluted earnings per share are estimated to increase approximately 10 percent in the range of $1.30 to $1.34.
Conference Call
Arctic Cat will host a conference call to discuss the fourth quarter and year-end results at 10:30 a.m. CT (11:30 a.m. ET) on Wednesday, May 15. To access the replay, dial (800) 633-8284, conference ID #20554502. The replay will be available from noon CT on Wednesday, May 15, until 5 p.m. CT on Friday, May 17. 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 for 30 days 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. Its common stock is traded on the Nasdaq National Market under the ticker symbol "ACAT." More information about Arctic Cat and its products is available on the Internet 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. The Company's Annual Report, as well as the Report on Form 10-K and future 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. 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 and pricing; increase in material or production cost which cannot be recouped in product pricing; changes in the sourcing of engines from Suzuki; 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; overall economic conditions; and consumer demand and confidence.
ARCTIC CAT INC.
FINANCIAL HIGHLIGHTS
(000s omitted, except per share amounts)
Three Months Ended Year Ended
March 31, March 31,
---------------------- -----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net Sales $99,260 $80,215 $556,079 $502,449
Cost of Goods Sold 82,921 66,862 433,297 398,019
---------- ---------- ---------- ----------
Gross Profit 16,339 13,353 122,782 104,430
Selling, General and
Administrative Expenses 19,658 16,400 83,228 68,712
---------- ---------- ---------- ----------
Operating Profit (Loss) (3,319) (3,047) 39,554 35,718
Other Income:
Interest Income 651 1,503 2,543 4,563
---------- ---------- ---------- ----------
Earnings (Loss) Before
Income Taxes (2,668) (1,544) 42,097 40,281
Income Tax Expense
(Benefit) (854) (509) 13,471 13,293
---------- ---------- ---------- ----------
Net Earnings (Loss) ($1,814) ($1,035) $28,626 $26,988
========== ========== ========== ==========
Net Earnings (Loss) Per
Share
Basic ($0.08) ($0.04) $1.21 $1.11
========== ========== ========== ==========
Diluted ($0.08) ($0.04) $1.20 $1.10
========== ========== ========== ==========
Weighted Average Shares
Outstanding
Basic 23,320 23,886 23,587 24,231
========== ========== ========== ==========
Diluted 23,320 23,886 23,925 24,457
========== ========== ========== ==========
Selected Balance Sheet Data: 03/31/02 03/31/01
--------------------------- -------- --------
Cash and Short-term investments $102,040 $99,828
Accounts receivable, net 23,818 24,897
Inventories, net 61,552 60,939
Total assets 268,596 255,658
Accounts payable 27,788 29,309
Long-term debt 0 0
Shareholders' equity 181,639 170,442
Fourth Quarter Ended Year Ended
March 31, March 31,
Product Line
Information 2002 2001 Incr% 2002 2001 Incr%
----------------------------------------------------------------------
Snowmobiles $4,741 $6,393 -26% $262,937 $231,618 +14%
All-terrain 71,602 46,303 +55% 205,154 182,932 +12%
Vehicles
Parts, Garments
& Accessories 22,917 27,519 -17% 87,988 87,899 0%
-------- -------- ---- -------- -------- ----
Total Sales $99,260 $80,215 +24% $556,079 $502,449 +11%
======== ======== ==== ======== ======== ====
The company implemented new accounting rules required by EITF Issues 01-09 and 00-14 during the fourth quarter of fiscal 2002. Dealer rebates and floor plan financing that were previously included in selling, general and administrative expense are now recorded as a reduction of sales. The cost of free products and services that were previously recorded in selling, general and administrative expense are now recorded as cost of goods sold. Accordingly, these expenses have been reclassified from selling, general and administrative expense as a reduction of net sales or an increase in cost of goods sold for all periods presented to conform to the new presentation and accounting rules. The adoption of the new rules had no impact on current or previously reported net earnings.