By Business Wire via The
Motley Fool
Minneapolis
-- Arctic Cat Inc. (NAS: ACAT) last week reported
that net earnings increased 17 percent to a record $25.0 million, or $1.80 per
diluted share, for the fiscal second quarter ended Sept. 30, 2012, compared to
prior-year net earnings of $21.4 million, or $1.15 per diluted share. Net sales
in the quarter rose 12 percent to $229.0 million versus net sales of $204.8
million in the same quarter last year.
"We are very pleased to report record earnings and EPS
on double-digit sales gains in the fiscal 2013 second quarter, on top of a
strong quarter last year," said Claude Jordan, Arctic Cat's chairman and
chief executive officer. "We are beginning to benefit from our growth
strategy to enter new market segments with innovative new products, such as our
Wildcat pure sport side-by-side, while focusing on operational excellence and
cost control. As a result, we continued to leverage higher sales volumes and a
lower cost structure to again deliver profitability gains in the second
quarter."
Among the highlights of Arctic Cat's fiscal 2013
second-quarter financial results versus the prior-year quarter:
- Net sales grew 12 percent, chiefly fueled by sales of
Wildcat recreational off-highway vehicles (ROVs);
- The company reported record net earnings and earnings per
diluted share, up 17 percent and 57 percent, respectively;
- Operating expenses as a percent of sales declined to 11
percent versus 12 percent;
- Operating profit rose 18 percent to $38.8 million, up from
$32.9 million;
- The company had no long-term debt.
For the six months ended Sept. 30, 2012, Arctic Cat's net
earnings rose 41 percent to a record $27.0 million, or $1.95 per diluted share,
compared to net earnings of $19.1 million, or $1.02 per diluted share, in the
prior-year period. The company's year-to-date net sales increased 22 percent to
$340.3 million versus net sales of $279.8 million in the first six months last
year.
Business Line Results
Sales in Arctic Cat's all-terrain vehicle (ATV) business
rose 19 percent to $69.7 million, up from $58.8 million in the same period last
year. The increase was primarily due to strong global demand from dealers and
customers for the Wildcat side-by-side.
During the fiscal 2013 second quarter, Arctic Cat began
shipping its new 2013 model year ATVs/ROVs. In addition to offering the Wildcat
V-Twin 1000i H.O., the company introduced the new Wildcat 1000 Limited
side-by-side, which offers upgraded styling features as part of a standard
package. Arctic Cat's new 2013 models also include five value-priced ATVs, such
as the new 500 Core ATV. Additionally, the company introduced three new ATV
packages--Limited, XT and CORE--to provide more optional features.
Commented Jordan,
"Our entry into the growing sport ROV segment has gone exceptionally well
with the Wildcat side-by-side. It is being well-received by enthusiasts and
Wildcat sales year to date continue to meet our high expectations. We now have
two Wildcat offerings in our portfolio and anticipate launching additional
innovative products into this market segment."
Jordan added, "In August, we were excited to see the
Wildcat 1000 named as the top pure sport ROV by a leading industry magazine,
after the editors conducted a head-to-head 'shootout' comparison against the
only competing pure sport side-by-side in the market."
Arctic Cat's snowmobile sales in the fiscal 2013 second
quarter rose 12 percent to $128.6 million, up from $114.7 million in the
prior-year quarter. The company's new 2013 model year snowmobiles have received
numerous industry awards, including: Editor's Choice for the F1100 Turbo RR
(race-replica); Best High Performance for the F800 Sno Pro RR; and Best
Crossover for the CrossTour 1100 Turbo.
Arctic Cat is building its 2013 model year snowmobiles on
the new ProCross performance and ProClimb mountain chassis platforms, both of
which offer innovative suspension, drive and braking technologies. In addition,
during the fiscal 2013 second quarter, the company partnered with world
champion snowmobile racer Tucker Hibbert to create a limited edition Tucker
Hibbert race-replica model honed to high performance excellence and available
to snowmobilers whose passion reflects the same race-winning attitude shared by
Tucker Hibbert and Arctic Cat.
Arctic Cat's new 2013 model year snowmobiles also include:
- ProCross F Sno Pro RR (race-replica) sled, which features
high-performance trail racing suspension and styling.
- ProCross XF CrossTour, a crossover model that combines the
best of snowmobile touring, trail and deep-snow capabilities. The CrossTour is
available in either the 800 2-stroke, or the 1100 turbo and non-turbo 4-stroke
engine. It offers riders trail performance and touring comfort with its wide
ski stance, ample storage and a heavy-duty rear bumper that easily accepts
accessories, such as an optional passenger seat.
- Arctic Cat's ProClimb M Series mountain snowmobiles also
received further enhancements to performance and handling. The turbocharged
M1100 four-stroke mountain model has 177 horsepower, making it the industry's
most powerful production engine available.
Arctic Cat remains committed to investing in research and
development across its product lines, in order to remain an industry innovation
leader and in anticipation of manufacturing its own snowmobile engines in
fiscal 2015.
Sales of parts, garments and accessories (PG&A) in the
fiscal 2013 second quarter were down 2 percent to $30.8 million versus $31.4
million in the prior-year quarter. While sales of Wildcat accessories and parts
grew significantly in the quarter, snowmobile garment sales were down versus
the prior-year period. Arctic Cat continues to anticipate increased PG&A
sales for the fiscal 2013 full year.
Company Raises Fiscal
2013 Sales and Earnings Outlook
"Our strategies are working and we are on track to
deliver the highest net earnings in Arctic Cat's 50-year history for fiscal
2013," said Jordan.
"We expect to continue generating higher revenue and earnings by
developing innovative new products and entering new segments. We remain focused
on new product development as an important catalyst to achieving our future
growth goals."
In fiscal 2013, Arctic Cat anticipates continued gains in
its ATV/ROV business, fueled by the growth potential for the Wildcat and
Prowler ROV offerings, and many exciting new products being developed.
Additionally, the company remains focused on further enhancing profitability
through operational efficiencies and cost controls.
Arctic Cat's fiscal 2013 outlook includes the following
assumptions versus the prior fiscal year: ATV North America industry retail
sales flat to up 5 percent; ROV North America industry retail sales up 10 to 20
percent; snowmobile North America industry retail sales flat to up 2 percent;
Arctic Cat dealer inventories flat to down 5 percent; operating expense levels
that are flat to down slightly as a percent of sales; and increasing cash flow
from operations. The company expects gross margins to improve between 20 and 60
basis points in fiscal 2013.
For the fiscal year ending March 31, 2013, Arctic Cat is
raising its full-year sales guidance to a range of $664 million to $684
million, an increase of approximately 13 percent to 17 percent versus fiscal
2012. Assuming diluted weighted average shares of 14 million, the company now
estimates that fiscal 2013 earnings per diluted share will be in the range of
$2.65 to $2.75, an increase of 54 percent to 60 percent compared to fiscal
2012. Previously, the company estimated fiscal 2013 earnings per diluted share
of $2.55 to $2.65 on sales of $662 million to $682 million.
