Arctic Cat Reports Fiscal 2012 Second Quarter Results
Net sales up 17 percent to $204.8 million on higher sales across all product lines;
Earnings per diluted share up 19 percent to $1.15 versus $0.97 in prior-year quarter;
Raising fiscal 2012 sales and earnings guidance to a range of $1.10 to $1.15 EPS, a 57% to 64% increase over fiscal 2011, on expected full-year sales growth of 14% to 17%
MINNEAPOLIS, Oct 27, 2011 (BUSINESS WIRE) — Arctic Cat Inc. (NASDAQ:ACAT) today reported that net earnings increased to $21.4 million, or $1.15 per diluted share, on net sales of $204.8 million for the fiscal second quarter ended September 30, 2011. In the prior-year second quarter, Arctic Cat reported net earnings of $17.8 million, or $0.97 per diluted share, on net sales of $175.8 million.
“We are very pleased to report double-digit sales and earnings gains in the second quarter,” said Claude Jordan, Arctic Cat’s president and chief executive officer. “Once again, revenue grew across all product lines. Sales in the quarter benefited from particularly strong snowmobile sales, driven by the introduction of our extensive new 2012 snowmobile model line-up. We also continued to improve profitability through operational excellence and a lower cost structure.”
Among the highlights of Arctic Cat’s fiscal 2012 second quarter financial results versus the same quarter last year:
* Net sales grew 17 percent;
* Operating expenses as a percent of sales declined to 11.8 percent compared to 13.6 percent;
* Operating income increased 20 percent;
* Total cash and short-term investments at quarter end rose to $96.6 million, up from $80.9 million; and
* The company had no short- or long-term debt.
Gross margins in the fiscal 2012 second quarter were down 126 basis points, primarily due to sales incentives on early season snowmobile sales, increased international shipments and product mix. Year to date, gross margins are down 39 basis points versus the prior year. The company expects higher gross margins in the fiscal 2012 second half of the year, and continues to expect full-year gross margin improvement of 20 to 60 basis points.
For the six months ended September 30, 2011, Arctic Cat’s net earnings were $19.1 million, or $1.02 per diluted share, on net sales of $279.8 million. In the first six months of last fiscal year, the company reported net earnings of $13.3 million, or $0.72 per diluted share, on net sales of $239.2 million.
Business Line Results
Snowmobile sales rose 25 percent to $114.7 million in the fiscal 2012 second quarter, up from $91.5 million in the prior-year quarter. Sales were fueled by Arctic Cat’s extensive new 2012 model line-up, announced in March 2011, with 23 all-new snowmobiles representing 75 percent of the current offerings. The company anticipates that the breadth of its new models and innovative technologies will have a positive impact on fiscal 2012 snowmobile sales. To date, two of Arctic Cat’s new 2012 model snowmobiles have been named as 2012 Sled of the Year – the F1100 Turbo high-performance model and the XF1100 Turbo SnoPro.
All-terrain vehicle (ATV) sales increased 4 percent to $58.8 million in the fiscal 2012 second quarter versus $56.6 million in the same period last year, primarily due to increased international ATV sales. Arctic Cat continued its strategy to match wholesale sales with actual retail demand, while introducing new models and features in segments with the greatest consumer demand.
During the second quarter, Arctic Cat began to roll out its all-new Wildcat V-Twin 1000i H.O. pure-sport recreational off-road vehicle (ROV), which was officially unveiled in July 2011. The Wildcat is a full-production version of what was previously reserved for off-road race vehicles, offering 17 inches of front suspension travel, 13 inches of ground clearance, a full-perimeter exoskeleton chassis and the largest displacement engine in its class.
“The Wildcat gives consumers a pure-sport hot rod and marks our first entry into the growing sport side-by-side market,” said Jordan. “Dealer demand for this off-road vehicle is very strong and we remain on track to begin shipping it to dealers in the third quarter of this fiscal year.”
Sales of parts, garments and accessories (PG&A) in the fiscal 2012 second quarter grew 13 percent to $31.4 million versus $27.6 million in the prior-year quarter. Contributing to higher PG&A sales were preseason snowmobile-related parts, garments and accessories, as well as the e-commerce initiative launched earlier this year. Arctic Cat also continued to expand its PG&A offerings and introduced nearly 40 Wildcat accessories for vehicle customization in the quarter.
Company Raises Fiscal 2012 Outlook
“We are again raising our full-year sales and earnings outlook for fiscal 2012, based on better than anticipated second-quarter results, higher anticipated volume, and a continued focus on controlling costs and leveraging our operating efficiency,” said Jordan. “The company remains well-positioned for future sales growth across all product lines. We continue to expect higher snowmobile sales, due to our new model line-up. We also see continued gains in our ATV business, due to the competitive strength of our core ATV and Prowler side-by-side offerings, and the growth potential for our Wildcat pure-sport ROV model. Additionally, we remain focused on further enhancing the company’s profitability through operational efficiencies.”
The company’s fiscal 2012 outlook includes the following assumptions versus the prior fiscal year: ATV industry retail sales declining approximately 10 to 15 percent; snowmobile industry retail sales up approximately 5 to 10 percent; Arctic Cat dealer inventories decreasing 10 to 20 percent; achieving lower operating expense levels as a percent of sales; increasing cash flow from operations; and ending the year with more cash on the balance sheet. At this time, the company expects gross margins to improve between 20 to 60 basis points in fiscal 2012, although commodity costs will remain a challenge for the foreseeable future.
For the fiscal year ending March 31, 2012, Arctic Cat now anticipates sales in the range of $530 million to $545 million, an increase of 14 percent to 17 percent versus fiscal 2011. The company estimates that fiscal 2012 earnings will increase 57 percent to 64 percent and be in the range of $1.10 to $1.15 per diluted share. Previously, the company expected sales in the range of $520 million to $530 million for fiscal 2012 and earnings per diluted share in the range of $0.94 to $1.00 per diluted share.
|ARCTIC CAT INC.|
|(000s omitted, except per share amounts) (Unaudited)|
Three Months Ended
Six Months Ended
|Snowmobile & ATV Units||$||173,459||$||148,166||$||228,719||$||193,104|
|Parts, Garments & Accessories||31,370||27,646||51,040||46,114|
|Total Net Sales||204,829||175,812||279,759||239,218|
|Cost of Goods Sold|
|Snowmobile & ATV Units||128,843||107,280||177,972||149,529|
|Parts, Garments & Accessories||18,837||17,274||30,363||27,672|
|Total Cost of Goods Sold||147,680||124,554||208,335||177,201|
|Selling & Marketing||12,160||10,823||18,245||16,889|
|Research & Development||3,821||3,647||7,823||6,872|
|General & Administrative||8,245||9,407||16,029||17,780|
|Total Operating Expenses||24,226||23,877||42,097||41,541|
|Total Other Income(Expense)||16||19||39||34|
|Earnings Before Income Taxes||32,939||27,400||29,366||20,510|
|Net Earnings Per Share|
|Weighted Average Shares Outstanding:|
|Selected Balance Sheet Data:||2011||2010|
|Cash and Short-term Investments||$||96,564||$||80,867|
|Accounts Receivable, net||96,030||70,502|
|Short-term Bank Borrowings||0||0|
|Total Current Liabilities||150,393||121,770|
Three Months Ended
Six Months Ended
|Product Line Data:||2011||2010||Change||2011||2010||Change|
|Parts, Garments & Accessories||31,370||27,646||13%||51,040||46,114||11%|
SOURCE: Arctic Cat Inc.