Arctic Cat Reports Record Second-Quarter Sales and Earnings
THIEF RIVER FALLS, Minn.--Oct. 1, 20036, 2003--Arctic Cat Inc. :-- Revenues Up 13% in Quarter; 9% Year-to-Date
-- Second Quarter EPS Grows 8% to 98 Cents
-- Company Exceeds Quarterly Consensus Estimate of 96 Cents
-- Snowmobile Sales Increase 17%; ATV Sales Up 14% in Quarter
Arctic Cat Inc. today reported record net sales of $237.7 million for the fiscal 2004 second quarter ended September 30, 2003, compared to $211.2 million in the same period last year. The net earnings for the quarter were $21.6 million, or 98 cents per diluted share, versus net earnings of $20.5 million, or 91 cents per diluted share, in the prior-year period.
For the six-month period, net sales were $314.8 million compared to $289.5 million in the first half of last year. Net earnings were $21.7 million, or 98 cents per diluted share, versus $22.5 million, or 98 cents per diluted share, for the prior year six-month period.
"We are pleased with our record second-quarter sales and earnings," said Christopher A. Twomey, chairman and chief executive officer. "Our results again exceeded the previous-year's record quarter."
Sales of Arctic Cat snowmobiles totaled $117.7 million in the 2004 second quarter, an increase of 17 percent versus sales of $100.7 million in the same period last year. Year-to-date snowmobile sales were $152.4 million, up 3 percent from $147.8 million in the prior-year period.
"Snowmobile sales are on plan for the year," Twomey said. "Although we will produce fewer snowmobiles this year in response to lackluster snowfall in recent years, we continue to offer exciting new models, with cutting-edge technology, to snowmobile enthusiasts. A normal snowfall this winter could drive significantly increased snowmobile sales and greater profitability next year."
Among Arctic Cat's extensive 2004 model snowmobile line, it is the first manufacturer to offer a turbo-charged engine on a four-stroke snowmobile, which is cleaner and quieter than a two-stroke engine. This breakthrough T660 Turbo 4-Stroke sled outperforms the EPA's 2012 emissions requirements, and offers a cleaner, quieter and faster ride. The T660 Turbo 4-Stroke again demonstrates Arctic Cat's leadership in fuel-management technology.
Arctic Cat manufactures the lowest emission four-stroke snowmobiles available within the industry. In September, five of Arctic Cat's four-stroke snowmobiles became the first to be approved for use this winter in Yellowstone National Park and Grand Teton National Park by the National Park Service (NPS), after meeting the NPS' new rules for lower snowmobile emissions and noise levels. The emissions from Arctic Cat's approved four-stroke snowmobiles significantly outperformed both the NPS' requirements, as well as the Environmental Protection Agency's year 2012 standards.
Sales of all-terrain vehicles (ATVs) grew to $91.6 million, up 14 percent from $80.1 million in the prior-year second quarter. Year-to-date ATV sales increased 22 percent to $123.0 million. Arctic Cat's ATV sales continue to outpace industry sales, driven by demand for the company's innovative new products.
"We experienced particularly strong orders for our new 650cc V-Twin ATV, which is our most powerful ATV yet, and our DVX sports model," said Twomey. "Both were introduced in June and represent our first entries into the growing big bore and sport market segments. Many of our dealers have pre-sold these models before they hit their dealerships."
Parts, garments and accessories (PG&A) sales were $28.4 million compared to $30.4 million in the second quarter of last year. Six-month PG&A sales totaled $39.4 million versus $41.0 million in the previous-year period.
"We expect full-year PG&A sales to grow, led by ATV-related sales, despite a decrease in snowmobile garment sales this fiscal year," said Twomey.
During the second quarter, the company repurchased 843,000 shares of Class B stock from Suzuki Motor Corporation, or 4 percent of Arctic Cat's total outstanding shares. The buyback returned Suzuki's ownership to just under 32 percent, or 6.7 million shares, of Arctic Cat's common stock. The transaction allowed Arctic Cat to repurchase a large block of shares without adversely impacting the current level of publicly traded shares. The company has approximately 700,000 shares remaining under its board-authorized repurchase program.
Outlook
Arctic Cat anticipates fiscal 2004 third-quarter net sales for the period ending December 31, 2003, in the range of $177 million to $185 million, compared to $176.2 million for the same period last year. Net earnings for the quarter are estimated to be between 43 cents and 47 cents per diluted share versus earnings of 53 cents per diluted share in the prior-year quarter. For comparison purposes, Arctic Cat's results in the prior-year third quarter benefited from a 15 cent per diluted share net reduction of restructuring accruals related to Arctic Cat's exit from the personal watercraft (PWC) business in September 1999. Excluding non-recurring items, comparable third-quarter earnings were 38 cents per diluted share in the year-ago period.
For the current fiscal year ending March 31, 2004, Arctic Cat anticipates net sales will grow 3 to 6 percent and be in the range of $595 million to $607 million. Full-year diluted earnings per share are estimated to be in the range of $1.39 to $1.41. Due to the seasonal nature of Arctic Cat's snowmobile and ATV products, the company sells the majority of its products during its second and third fiscal quarters.
Conference Call
Arctic Cat will host a conference call to discuss the second-quarter results at 10:30 a.m. CT (11:30 a.m. ET) on Thursday, October 16. To access the replay, dial 402-977-9140 and enter conference call ID 21163052. The audio replay will be available beginning at approximately noon CT on Thursday, October 16, until 6 p.m. CT on Tuesday, October 21.
The conference call also will be Webcast. To access the live Webcast, go to the corporate portion of the company's Web site at www.arcticcat.com, and click on the conference call icon.
About Arctic Cat
Arctic Cat Inc. designs, manufactures and markets world-class 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.arcticcat.com.
ARCTIC CAT INC.
Financial Highlights
(000s omitted, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
---------------------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net Sales $237,650 $211,242 $314,839 $289,525
Cost of Goods Sold 181,478 158,272 240,141 217,712
--------- --------- --------- ---------
Gross Profit 56,172 52,970 74,698 71,813
Selling, General and
Administrative Expenses 24,616 23,032 43,241 39,357
--------- --------- --------- ---------
Operating Profit 31,556 29,938 31,457 32,456
Other Income
Interest Income 162 238 411 616
--------- --------- --------- ---------
Earnings Before Income Taxes 31,718 30,176 31,868 33,072
Income Taxes 10,149 9,656 10,197 10,583
--------- --------- --------- ---------
Net Earnings $21,569 $20,520 $21,671 $22,489
========= ========= ========= =========
Net Earnings Per Share
Basic $0.99 $0.92 $0.99 $0.99
========= ========= ========= =========
Diluted $0.98 $0.91 $0.98 $0.98
========= ========= ========= =========
Weighted Average Shares
Outstanding:
Basic 21,707 22,414 21,838 22,708
========= ========= ========= =========
Diluted 21,999 22,600 22,125 22,962
========= ========= ========= =========
Six Months Ended
September 30,
------------------------------
Selected Balance Sheet Data: 2003 2002
------------------------------- -------------- -------------
Cash and Short-term Investments $40,698 $56,339
Accounts Receivable, net 75,639 70,468
Inventories, net 108,229 94,521
Total Assets 306,525 297,936
Current Liabilities 113,070 106,371
Long-term Debt 0 0
Shareholders' Equity 181,278 182,756
Three Months Ended Six Months Ended
September 30, September 30,
-------------------------------------
Product Line Data: 2003 2002 Change 2003 2002 Change
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Snowmobiles $117,662 $100,734 17% $152,428 $147,770 3%
All-terrain Vehicles 91,554 80,142 14% 123,046 100,767 22%
Parts, Garments &
Accessories 28,434 30,366 -6% 39,365 40,988 -4%
-------------------------------------------------
Total Sales $237,650 $211,242 13% $314,839 $289,525 9%
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