Arctic Cat Announces Second Quarter Results; Sales and Earnings Meet Expectations
26 October 2000
Arctic Cat Announces Second Quarter Results; Sales and Earnings Meet Expectations
THIEF RIVER FALLS, Minn.--Oct. 26--Arctic Cat Inc. today reported results for the fiscal 2001 second-quarter and six-months ended September 30, 2000.Net sales for the quarter were $192,854,000 compared to $205,507,000 for the same period last year. Net earnings were $18,606,000, or 76 cents per diluted share, for the second quarter compared to adjusted net earnings of $19,071,000, or 74 cents per diluted share, reported for the second quarter of fiscal 2000.
For the six-month period, net sales were $278,815,000 compared to $292,435,000 for the same period last year. Net earnings were $20,658,000, or 84 cents per diluted share, compared to adjusted net earnings $20,932,000, or 81 cents per diluted share, reported in the first half of 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 $16,899,000, 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 fiscal 2000 net earnings of $2,172,000, or 8 cents per diluted share, for the second quarter and net earnings of $4,033,000, or 16 cents per diluted share, for the comparable six-month period.
Commenting on the quarter, Christopher A. Twomey, president and chief executive officer, said, "As expected, Arctic Cat's second-quarter sales slightly decreased due to moderately lower dealer orders related to poor snow conditions last year. Snowmobile customer interest remains strong as evidenced by the 22 percent increase in extra-early orders that we experienced this year. We continue to invest in our snowmobile business and believe that a normal snow season will lead to significant future sales increases. We intend to maintain our strong market position and are prepared to take advantage of this product line's growth opportunities. "
Year to date, Arctic Cat's ATV sales continue to outpace the industry's strong double-digit growth. "Our complete model line and our expanding dealer network should further drive strong growth in this exciting product area," said Twomey. "For the year, we expect that the growth of our ATV sales will offset an anticipated decline in snowmobile sales. As a result, we remain on track to post record-breaking revenues and increased earnings this fiscal year."
Currently, sales of ATVs comprise 36 percent of Arctic Cat's total revenue, with snowmobiles accounting for 49 percent of revenue. Sales of parts, garments and accessories account for the remainder.
"Our business mix continues to shift toward a larger percentage of ATV sales, as part of our strategic growth plan," said Twomey. "The ATV market is rapidly growing and serves to insulate us from weather-related snowmobile demand. By year-end, we expect ATVs to account for nearly 40 percent of our total revenue and more than 50 percent of units produced."
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 http://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
Unaudited
(000s omitted, except per share amounts)
Three Months Ended Six Months Ended
September 30, September 30,
------------------- ------------------
2000 1999 2000 1999
--------- --------- -------- ---------
Net Sales $192,854 $205,507 $278,815 $292,435
Cost of Goods Sold 141,206 153,866 205,593 219,079
Watercraft Inventory Writedown - 2,835 - 2,835
--------- --------- -------- ---------
Gross Profit 51,648 48,806 73,222 70,521
Selling, General And
Administrative Expenses 24,682 27,671 44,301 47,271
Watercraft Exit Costs - 18,627 - 18,627
--------- --------- -------- ---------
Operating Profit 26,966 2,508 28,921 4,623
Other Income (Expense):
Interest Income 804 859 1,911 1,629
Interest Expense - - - -
--------- --------- -------- ---------
804 859 1,911 1,629
Earnings Before Income Taxes 27,770 3,367 30,832 6,252
Income Taxes 9,164 1,195 10,174 2,219
--------- --------- -------- ---------
Net Earnings $18,606 $2,172(a) $20,658 $4,033(a)
========= ========= ======== =========
Net Earnings Per Share
Basic $0.77 $0.08 $0.84 $0.16
========= ========= ======== =========
Diluted $0.76 $0.08(a) $0.84 $0.16(a)
========= ========= ======== =========
Weighted Average Shares
Outstanding
Basic 24,294 25,705 24,550 25,828
=================== ==================
Diluted 24,544 25,740 24,724 25,862
========= ========= ======== =========
(a) Includes a $16.9 million after-tax charge, or 66 cents per
diluted share, for certain costs related to discontinued personal
watercraft business.