Arctic Cat Announces Record 2003 Third-Quarter Sales
THIEF RIVER FALLS, Minn.--Jan. 30, 2003--Arctic Cat Inc. :-- | Comparable third-quarter diluted EPS rises 12 percent versus prior-year period |
-- | Comparable year-to-date EPS is $1.36 versus $1.27 last year |
-- | Reduction of restructuring accruals adds 15 cents diluted EPS in 2003 third quarter |
Arctic Cat Inc. today reported third quarter ended December 31, 2002, net sales of $176.2 million, up 5 percent over $167.9 million for the same period last year. Net earnings in the 2003 quarter increased 45 percent to $11.9 million, or 53 cents per diluted share, compared to net earnings of $8.2 million, or 34 cents per diluted share, in the year-ago quarter. The quarter's results included the net reduction of restructuring accruals related to Arctic Cat's exit from the personal watercraft (PWC) business in September 1999. Excluding non-recurring items, net sales in the 2003 third quarter rose 3 percent to $172.2 million, net earnings increased 4 percent to $8.5 million, and diluted earnings per share increased 12 percent to 38 cents.
For the 2003 nine-month period, net sales including non-recurring items grew 2 percent to $465.7 million compared to $456.8 million in the prior year. As a result, 2003 net earnings were $34.4 million, or $1.51 per diluted share, compared to net earnings of $30.4 million in the year-ago period, or $1.27 per diluted share. Excluding non-recurring PWC items, year-to-date net sales increased 1 percent to $461.7 million, net earnings rose 2 percent to $31.0 million, and diluted earnings per share increased 7 percent to $1.36.
"Our record quarterly revenues were driven by increased ATV sales, offsetting a planned decline in snowmobile sales this year," said Christopher A. Twomey, Arctic Cat's president and chief executive officer. "Arctic Cat's retail ATV sales in calendar 2002 were approximately double the industry's growth rate, due to our expanded offerings in the growing utility segment of this market."
Commenting on the snowmobile business, Twomey said: "This has been a lackluster year for the entire snowmobile industry due to the disappointing snow conditions throughout most of the United States. However, we are encouraged by the relative strength of Arctic Cat snowmobile sales, which declined by less than half that of the rest of the industry. Significantly, this means we gained market share. In addition, since we planned on lower demand this year and built fewer snowmobiles, we expect to end the winter season with manageable inventory levels."
Arctic Cat introduced several industry-leading all-terrain vehicle (ATV) and snowmobile products this year. These include the previously announced Multi-Rack Platform (MRP) ATV, which enables users to adapt their ATV to a wide range of applications by attaching up to 20 different accessories on the vehicle's front and rear racks, and the all-new Firecat high-performance snowmobile. In addition, the company announced in January 2003 that during the fourth quarter it will offer a limited number of F6 Firecat EFI high-performance snowmobiles with a 600cc engine, providing a sneak preview of Arctic Cat's 2004 model line-up.
"We're pleased with consumers' response to all of our new models," Twomey said. "Further, we're building on our success by introducing new features that we expect will boost demand in fiscal 2004, including breakthroughs in performance, styling and comfort."
During the third quarter, the company repurchased 153,000 shares of common stock, bringing its total stock repurchases during the current fiscal year to 1.4 million shares. Since 1996, Arctic Cat has repurchased more than 8 million shares under three share repurchase authorizations.
Outlook
Arctic Cat continues to expect record revenues for its 2003 fiscal year, ending March 31, 2003.
"We sell the majority of our products to dealers in our second and third quarters, which provides strong predictability in our sales and earnings projections for the remainder of the year," Twomey said. "Our focus is on building shareholder value, with a goal of 10 percent earnings-per-share growth in fiscal 2003. We remain on track to achieve this."
Arctic Cat anticipates that most of its growth this year will be driven by ATV sales, which will offset the planned decrease in snowmobile sales.
The company expects 2003 fourth-quarter net sales will be in the range of $99 million to $105 million, compared to $99.3 million for the same period last year. The net loss for the fourth quarter is estimated between 4 to 8 cents per diluted share versus a net loss of 8 cents per diluted share in the prior-year quarter.
For the 2003 fiscal year, Arctic Cat anticipates net sales, including non-recurring PWC items, in the range of $560 million to $570 million versus net sales of $556.1 million for the prior year. Diluted earnings per share, including non-recurring PWC items, are estimated to be in the range of $1.43 to $1.47. Excluding non-recurring PWC items, diluted earnings per share are estimated to increase approximately 10 percent and be in the range of $1.28 to $1.32.
Conference Call
Arctic Cat will host a conference call to discuss the third quarter results at 10:30 a.m. CT (11:30 a.m. ET) today. A replay of the call will be available from approximately noon CT on Thursday, January 30, until 6 p.m. CT on Friday, January 31. To access the replay, dial 402-977-9140 and enter conference call ID #21107684. The conference call also will be Webcast live. To access this Webcast, go to the corporate portion of the company's Web site at www.arcticcat.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.
About Arctic Cat
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 on Arctic Cat, visit the company's Web site 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 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) (Unaudited) Three Months Ended December 31, ------------------------------------------ 2002 2001 ------------------------------- --------- Before Non- Non- Recurring Recurring Items Items(a) Reported Reported --------- --------- --------- --------- Net Sales $ 172,175 $ 4,000 $ 176,175 $ 167,917 Cost of Goods Sold 136,522 -- 136,522 132,275 --------- --------- --------- --------- Gross Profit 35,653 4,000 39,653 35,642 Selling, General And Administrative Expenses 23,595 1,000 24,595 24,345 Watercraft Exit Costs -- (2,404) (2,404) -- --------- --------- --------- --------- Operating Profit 12,058 5,404 17,462 11,297 Other Income (Expense): Interest Income 452 -- 452 690 --------- --------- --------- --------- Earnings Before Income Taxes 12,510 5,404 17,914 11,987 Income Taxes 4,003 1,999 6,002 3,836 --------- --------- --------- --------- Net Earnings $ 8,507 $ 3,405 $ 11,912 $ 8,151 ========= ========= ========= ========= Net Earnings Per Share Basic $ 0.38 $ 0.15 $ 0.54 $ 0.35 ========= ========= ========= ========= Diluted $ 0.38 $ 0.15 $ 0.53 $ 0.34 ========= ========= ========= ========= Weighted Average Shares Outstanding Basic 22,099 22,099 22,099 23,335 ========= ========= ========= ========= Diluted 22,289 22,289 22,289 23,671 ========= ========= ========= ========= (a) Net reduction of accrual related to September 1999 exit from the personal watercraft business. ARCTIC CAT INC. Financial Highlights (000s omitted, except per share amounts) (Unaudited) Nine Months Ended December 31, ------------------------------------------ 2002 2001 ------------------------------- --------- Before Non- Non- Recurring Recurring Items Items(a) Reported Reported --------- --------- --------- --------- Net Sales $ 461,700 $ 4,000 $ 465,700 $ 456,819 Cost of Goods Sold 354,234 -- 354,234 350,376 --------- --------- --------- --------- Gross Profit 107,466 4,000 111,466 106,443 Selling, General And Administrative Expenses 62,952 1,000 63,952 63,570 Watercraft Exit Costs -- (2,404) (2,404) -- --------- --------- --------- --------- Operating Profit 44,514 5,404 49,918 42,873 Other Income (Expense): Interest Income 1,068 -- 1,068 1,892 --------- --------- --------- --------- Earnings Before Income Taxes 45,582 5,404 50,986 44,765 Income Taxes 14,586 1,999 16,585 14,325 --------- --------- --------- --------- Net Earnings $ 30,996 $ 3,405 $ 34,401 $ 30,440 ========= ========= ========= ========= Net Earnings Per Share Basic $ 1.38 $ 0.15 $ 1.53 $ 1.29 ========= ========= ========= ========= Diluted $ 1.36 $ 0.15 $ 1.51 $ 1.27 ========= ========= ========= ========= Weighted Average Shares Outstanding Basic 22,505 22,505 22,505 23,676 ========= ========= ========= ========= Diluted 22,737 22,737 22,737 24,008 ========= ========= ========= ========= (a) Net reduction of accrual related to September 1999 exit from the personal watercraft business. Selected Balance Sheet Data: 12/31/02 12/31/01 --------------------------- -------- -------- Cash and Short-term Investments $86,429 $82,881 Accounts Receivable, net 42,074 49,568 Inventories, net 85,702 77,919 Total Assets 291,575 284,911 Accounts Payable 32,218 28,241 Long-term Debt 0 0 Shareholders' Equity 192,233 187,104 Three Months Ended Nine Months Ended December 31, December 31, ---------------------------------------------------------------------- Product Line Data 2002 2001 Incr% 2002 2001 Incr% ---------------------------------------------------------------------- Snowmobiles $ 96,003 $105,446 -9% $243,671 $255,103 -4% All-terrain Vehicles 52,315 38,767 35% 153,179 135,292 13% Parts, Garments & Accessories 23,857 23,704 1% 64,850 66,424 -2% ------------------------------------------------- Total Net Sales $172,175 $167,917 3% $461,700 $456,819 1% =================================================