Arctic Cat Announces Record 2004 Third-Quarter Sales
THIEF RIVER FALLS, Minn.--Jan. 2, 20042, 2004--Arctic Cat Inc. :Third-Quarter Highlights:
-- ATV Sales Up 28%
-- Snowmobile Sales Increased 5%
-- Parts, Garments & Accessories Sales Grew 12%
Arctic Cat Inc. today reported record net sales of $194.6 million for the fiscal 2004 third quarter ended December 31, 2003, up 10 percent from net sales of $176.2 million in the prior-year quarter. Third-quarter net earnings were $9.7 million, or 46 cents per diluted share, compared to net earnings of $11.9 million, or 53 cents per diluted share, in the same period last year. For comparison purposes, results in the prior-year quarter 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 prior-year third quarter totaled $172.2 million and net earnings were $8.5 million, or 38 cents per diluted share.
For the 2004 nine-month period, net sales grew 9 percent to $509.5 million versus $465.7 million in the year-ago period. Net earnings were $31.4 million, or $1.44 per diluted share, compared to net earnings of $34.4 million, or $1.51 per diluted share, in the prior-year period. Excluding non-recurring PWC items, net sales in the first nine months last year were $461.7 million and net earnings totaled $31.0 million, or $1.36 per diluted share.
"We're pleased to report record quarterly revenues that exceeded our expectations," said Christopher A. Twomey, Arctic Cat's chairman and chief executive officer. "Contributing to our strong performance were higher than anticipated snowmobile sales, and robust sales of both ATVs and parts, garments and accessories."
Sales of all-terrain vehicles (ATVs) in the third quarter grew to $67.1 million, up 28 percent from $52.3 million in the same period last year. The company's year-to-date ATV sales increased 24 percent to $190.2 million compared to $153.2 million last year.
"We experienced growing demand for Arctic Cat's award-winning ATVs and continued to gain ATV market share," said Twomey. "With our current 2004 models, we expanded our ATV line to reach virtually all market segments, including the growing sport performance segment, the two rider ATV segment, and the large displacement engine segment." The company now offers a comprehensive line of 28 ATV models, ranging from 50cc to 650cc engines.
Arctic Cat's ATVs continued to earn industry accolades. Its most powerful ATV, the newly introduced 650 4X4 Automatic, was named "2004 ATV of the Year" by both ATV Illustrated and ATV Guide.
The company's versatile MultiRack(TM) Platform (MRP) for ATVs earned All-Terrain Vehicle Magazine's "2004 Best In Class" award under the Best Utility Feature category. The MRP system allows users to quickly customize their ATVs with more than 40 available attachments, including nine customized accessory packages for specific applications in construction, ranching, camping, fishing, landscaping and hunting.
Snowmobile sales grew 5 percent in the third quarter to $100.9 million versus $96.0 million in the prior-year period. Year-to-date snowmobile sales also rose 4 percent to $253.3 million compared to $243.7 million during the same period last year.
In the 2004 model year, Arctic Cat continued its leadership tradition of snowmobile innovation with the introduction of the industry's first turbocharged four-stroke snowmobile, the T660 Turbo. This industry-leading advancement offers snowmobilers a cleaner, quieter, more fuel efficient snowmobile along with the enhanced performance provided by turbo charging.
Sales of parts, garments and accessories (PG&A) increased 12 percent to $26.6 million versus $23.9 million in the prior-year third quarter. Year-to-date PG&A sales rose 2 percent to $66.0 million compared to $64.9 million in the year-ago period.
Reflecting the company's confidence in its financial strength and long-term prospects, Arctic Cat raised its quarterly cash dividend 17 percent to 7 cents per share of common and Class B common stock during the third quarter. At the end of the third quarter ended December 31, 2003, the company reported $64.6 million in cash and no long-term debt.
Outlook
Arctic Cat anticipates reporting record revenues for its 2004 fiscal year, ending March 31, 2004, primarily driven by higher ATV sales.
The company expects 2004 fourth-quarter net sales to be in the range of $120 million to $130 million, compared to $111.4 million for the same period last year. The net loss for the fourth quarter is estimated to be between 3 cents and 5 cents per diluted share versus a net loss of 8 cents per diluted share in the prior-year quarter. 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, and typically reports a small loss in the fourth quarter.
For the current fiscal year ending March 31, 2004, Arctic Cat anticipates net sales will grow 9 percent to 11 percent and be in the range of $629 million to $639 million. Full-year diluted earnings per share are estimated to be in the range of $1.39 to $1.41 versus diluted earnings per share of $1.45 last fiscal year, which included a benefit of 15 cents per diluted share from non-recurring PWC items.
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 today until 6 p.m. CT on Thursday, January 29. To access the replay, dial 800-405-2236 and enter conference call ID #565883. 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 Webcast 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,
--------------------------------------
2003 2002
--------- ----------------------------
Before Non- Non-
Recurring Recurring
Reported Items Items(a) Reported
--------- --------- -------- ---------
Net Sales $194,618 $172,175 $4,000 $176,175
Cost of Goods Sold 150,637 136,522 - 136,522
--------- --------- -------- ---------
Gross Profit 43,981 35,653 4,000 39,653
Selling, General And
Administrative Expenses 29,945 23,595 1,000 24,595
Watercraft Exit Costs - - (2,404) (2,404)
--------- --------- -------- ---------
Operating Profit 14,036 12,058 5,404 17,462
Other Income (Expense):
Interest Income 279 452 - 452
--------- --------- -------- ---------
Earnings Before Income Taxes 14,315 12,510 5,404 17,914
Income Taxes 4,582 4,003 1,999 6,002
--------- --------- -------- ---------
Net Earnings $9,733 $8,507 $3,405 $11,912
========= ========= ======== =========
Net Earnings Per Share
Basic $0.46 $0.38 $0.15 $0.54
========= ========= ======== =========
Diluted $0.46 $0.38 $0.15 $0.53
========= ========= ======== =========
Weighted Average Shares
Outstanding
Basic 21,009 22,099 22,099 22,099
========= ========= ======== =========
Diluted 21,316 22,289 22,289 22,289
========= ========= ======== =========
(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,
-------------------------------------
2003 2002
--------- ---------------------------
Before Non- Non-
Recurring Recurring
Reported Items(a) Items Reported
--------- --------- ------- ---------
Net Sales $509,457 $461,700 $4,000 $465,700
Cost of Goods Sold 390,778 354,234 - 354,234
--------- --------- ------- ---------
Gross Profit 118,679 107,466 4,000 111,466
Selling, General And
Administrative Expenses 73,186 62,952 1,000 63,952
Watercraft Exit Costs - - (2,404) (2,404)
--------- --------- ------- ---------
Operating Profit 45,493 44,514 5,404 49,918
Other Income (Expense):
Interest Income 690 1,068 - 1,068
--------- --------- ------- ---------
Earnings Before Income Taxes 46,183 45,582 5,404 50,986
Income Taxes 14,779 14,586 1,999 16,585
--------- --------- ------- ---------
Net Earnings $31,404 $30,996 $3,405 $34,401
========= ========= ======= =========
Net Earnings Per Share
Basic $1.46 $1.38 $0.15 $1.53
========= ========= ======= =========
Diluted $1.44 $1.36 $0.15 $1.51
========= ========= ======= =========
Weighted Average Shares
Outstanding
Basic 21,562 22,505 22,505 22,505
========= ========= ======= =========
Diluted 21,855 22,737 22,737 22,737
========= ========= ======= =========
(a) Net reduction of accrual related to September 1999 exit from the
personal watercraft business.
December 31,
-------------------
Selected Balance Sheet Data: 2003 2002
-------------------
Cash and Short-term Investments $64,642 $86,429
Accounts Receivable, net 43,066 42,074
Inventories, net 103,948 85,702
Total Assets 292,721 291,575
Current Liabilities 88,914 89,396
Long-term Debt 0 0
Shareholders' Equity 190,674 192,233
Three Months Ended Nine Months Ended
December 31, December 31,
----------------------------------------------------------------------
Product Line Data 2003 2002 Incr% 2003 2002 Incr%
----------------------------------------------------------------------
Snowmobiles $100,865 $96,003 5% $253,293 $243,671 4%
All-terrain Vehicles 67,138 52,315 28% 190,184 153,179 24%
Parts, Garments &
Accessories 26,615 23,857 12% 65,980 64,850 2%
Non-Recurring
Items(a) - 4,000 - 4,000
-------------------------------------------
Total Net Sales $194,618 $176,175 10% $509,457 $465,700 9%
=================================================
(a) Net reduction of accrual related to September 1999 exit from the
personal watercraft business.