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Arctic Cat Q3 2011 Financial Report

Arctic Cat Reports Fiscal 2011 Third Quarter Results

Quarterly EPS $0.50 versus $0.14 in prior-year quarter on net sales growth of 16%;
Third quarter operating profit rose to $12.2 million from $0.6 million;
Company again raises FY11 annual earnings guidance

MINNEAPOLIS, Jan 27, 2011 (BUSINESS WIRE) —

Arctic Cat Inc. (NASDAQ:ACAT) today reported net earnings of $9.3 million, or $0.50 per diluted share, on net sales of $152.0 million for the fiscal 2011 third quarter ended December 31, 2010. Arctic Cat reported net earnings in the prior-year third quarter of $2.6 million, or $0.14 per diluted share, on net sales of $131.0 million.

For the nine months ended December 31, 2010, Arctic Cat’s net earnings were $22.6 million, or $1.22 per diluted share, on net sales of $391.2 million. In the first nine months of last fiscal year, the company reported net earnings of $11.4 million, or $0.63 per diluted share, on net sales of $366.7 million.

Commented Arctic Cat’s president and chief executive officer Claude Jordan: “We are very pleased with the company’s strong third-quarter and year-to-date performance. Our results were fueled by higher sales across all product lines, including double-digit gains in our snowmobile business. The combination of increased volume, product mix, product cost-reduction efforts, higher selling prices and a continued focus on efficiency led to another quarter of significantly improved gross margins and profitability.”

Among the highlights of Arctic Cat’s 2011 third quarter and year-to-date financial results versus the same periods last year:

-Gross margins improved 430 basis points in the quarter and 370 basis points year to date;

-Operating profit for the quarter rose to $12.2 million from $0.6 million, and year to date increased to $32.7 million from $13.9 million;

-Factory inventory declined 27 percent to $77.2 million from $106.3 million;

-Total cash and short-term investments rose to $107.1 million from $50.4 million; and

-The company has no short- or long-term debt.

“We are excited by the traction and momentum we’ve achieved year to date,” said Jordan. “We continued to successfully execute against our objectives to reduce dealer and factory inventory, improve gross margins and keep operating expenses flat as a percent of sales.”

Business Line Results

Snowmobile sales grew 33 percent to $77.8 million in the third quarter compared to $58.7 million in the prior-year quarter, led by increases in both North American dealer sales and international sales to distributors. Year-to-date snowmobile sales increased 15 percent to $186.5 million versus $162.3 million in the same period last year, led by higher international sales to distributors.

All-terrain vehicle (ATV) sales rose 1 percent to $48.6 million in the third quarter versus $48.2 million in the prior-year quarter, chiefly driven by sales of the company’s new Prowler HDX heavy duty utility vehicle. During the quarter, Arctic Cat announced the launch of three all-new 2011 ATV models: the full-featured, value-priced 350 4X4 automatic; the valued-priced 425 EFI 4X4 automatic; and the XC450i 4X4, a crossover model for consumers seeking four-wheel-drive capabilities in a sport ATV. Arctic Cat’s year-to-date ATV sales were up 1 percent to $133.0 million compared to $132.1 million in the first nine months of fiscal 2010.

Sales of parts, garments and accessories (PG&A) in the third quarter grew 6 percent to $25.6 million versus $24.2 million in the prior-year quarter, primarily driven by stronger garments sales including the new Drift garment line. Year-to-date PG&A sales totaled $71.7 million, down 1 percent from $72.3 million in the year-ago period.

Outlook

“We remain confident that the company is on track to deliver improved operating results, increased profitability and enhanced shareholder value again this fiscal year,” Jordan said.

Arctic Cat is focused on improving its profitability in a continued low-demand recreational vehicle market, which remains well below pre-recession industry sales levels. The company’s fiscal 2011 outlook includes the following assumptions: ATV industry retail sales declining approximately 15 to 20 percent; snowmobile industry retail sales increasing 5 to 10 percent; Arctic Cat dealer inventories declining 20 to 30 percent; improving gross margins between 200 to 300 basis points; achieving flat to slightly down operating expense levels as a percent of sales; increasing cash flow from operations; and ending the year with more cash on the balance sheet.

Based on its year-to-date results and expectations of future performance, Arctic Cat is raising and narrowing its estimated full-year earnings for the current fiscal year ending March 31, 2011. The company now anticipates that fiscal 2011 earnings will be in the range of $0.57 to $0.65 per diluted share, driven by increased international revenue, as well as higher gross margins resulting from higher volume, product mix and cost reduction efforts. The company’s previous guidance anticipated fiscal 2011 earnings of $0.40 to $0.55 per diluted share. The company continues to estimate fiscal 2011 net sales of $453 million to $463 million.

ARCTIC CAT INC.

Financial Highlights

(000s omitted, except per share amounts)(Unaudited)

Three Months Ended Nine Months Ended
December 31, December 31,
2010 2009 2010 2009
Net Sales
Snowmobile & ATV Units $ 126,381 $ 106,879 $ 319,485 $ 294,433
Parts Garments & Accessories 25,595 24,161 71,709 72,277
Total Net Sales 151,976 131,040 391,194 366,710
Cost of Goods Sold
Snowmobile & ATV Units 104,723 95,025 254,252 249,115
Parts Garments & Accessories 14,521 13,434 42,193 42,255
Cost of Goods Sold 119,244 108,459 296,445 291,370
Gross Profit 32,732 22,581 94,749 75,340
Operating Expenses
Selling & Marketing 8,502 8,941 24,973 24,982
Research & Development 3,418 2,979 9,828 9,177
General & Administrative 8,595 10,037 27,255 27,323
Total Operating Expenses 20,515 21,957 62,056 61,482
Operating Profit 12,217 624 32,693 13,858
Other Income (Expense)
Interest Income 28 72 4
Interest Expense (1 ) (2 ) (11 ) (249 )
Total Other Income (Expense) 27 (2 ) 61 (245 )
Earnings Before Income Taxes 12,244 622 32,754 13,613
Income Tax Expense (Benefit) 2,982 (1,980 ) 10,161 2,178
Net Earnings $ 9,262 $ 2,602 $ 22,593 $ 11,435
Net Earnings Per Share
Basic $ 0.51 $ 0.14 $ 1.24 $ 0.63
Diluted $ 0.50 $ 0.14 $ 1.22 $ 0.63
Weighted Average Shares
Outstanding:
Basic 18,236 18,228 18,214 18,217
Diluted 18,644 18,297 18,484 18,249
December 31,
Selected Balance Sheet Data: 2010 2009
Cash and Short-term Investments $ 107,070 $ 50,356
Accounts Receivable, net 50,301 43,008
Inventories 77,150 106,264
Total Assets 296,505 267,077
Short-term Bank Borrowings 0 0
Total Current Liabilities 102,984 82,788
Long-term Debt 0 0
Shareholders’ Equity 190,953 179,710

Three Months Ended

Nine Months Ended

December 31

December 31

Product Line Data:

2010

2009

Change

2010

2009

Change

Snowmobiles $ 77,822 $ 58,665 33% $ 186,452 $ 162,321 15%
All-terrain Vehicles 48,559 48,214 1% 133,033 132,112 1%
Parts, Garments & Accessories 25,595 24,161 6% 71,709 72,277 -1%
Total Sales $ 151,976 $ 131,040 16% $ 391,194 $ 366,710 7%

SOURCE: Arctic Cat Inc.

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24 COMMENTS

  1. Hey Arctic Insider. Last year you post spy pics from TRF of a potential new chassis – but yet somehow you don’t post the the latest spy pics floating around on HCS. Normally your pretty good about that stuff, but I’d say you slacked a little by not getting those up here.

  2. Hey Cat House: Check out the forum here (by clicking the “Forum” tab at the top of the home page. You’ll see that the image has been up for a day. I don’t want to “steal” the discussion from there, but maybe I should also put in on the homepage.

    Got an opinion about that?

  3. Not sure why it would even a question to put it on the homepage?
    Not anymore though, old news.

    But I’m sure open to seeing some other spy pics you might be able to get ahold of…I meant seeing some other spy pics that you already have šŸ™‚

  4. Thank you for the post but I don’t agree with the part about ?? not being able to communicate and calfiry it’s positions, and HKReporter.com was not very helpful. Note that Yuk Man has his program online twice a week, sometimes Chan Wai Yip was there, also Ma. Ma also shows up in ????? and ?????, Long Hair sometimes also present in Mr. Siu’s program, many times LSD’s positions were clarified in these programs, not just HKReporter’s forums, this is way better than using Facebook.

  5. ? ? ?? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ?? ? ? ? ? ?? ? ?? ? ?? ? ?? ? ? ?? ??? ? ? ? ?? ?? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ? ?? ?? ? ? ?? ? ?? ? ? ? ?? Time Edit ? ? ? ?? ?? ? ? ? ? ?? ? ? ? ?? ? ?? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ? ?? ?? ? ?? ? ?? ?? ? ? ?? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ? ?..? ? ? ? ? ? ? ??? ? ?? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ?? .. ? ? ?? ? ? ? ? ? ? ? ??? ? ?? ? ?? ? ?? ? ? ? ? ? ??? ?? ??? ?? ? ? ? ? ? ?? ? ?? ?? ? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ?? ? ..(? ? ? ? ? ?? ? ? ?? ?? ?? ? ? ?? )? ? ? ? ?? ? ? ??? ? ?? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ?? ?? ? ? ? ? ? ? ? ? ??? ? ?? ? ? ? ? ? ? ? ? ?? ? ? ? ? ?? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ? ?? ?? ? ? ? ? ? ? ?? ?? ? ? ?? ( ? ? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ?? ? ? ? ? ? ) ? ? ?? ? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ? ??? ? ? ?? ? ? ? ? ?? ? ? ? ? ? ??? ? ?? ? ? ?? ? ??? ?? ? ? ?? ? ?? ? ? ? ? ? ? ? ? ? ? ? ?? ? ?? ? ? ?? ? ?? ? ? ? ? ? ?? ?? ? ? ? ? ? ? ??? ? ? ? ?? ? ??? ? ? ? ? ? ?? ??? .. ? ? ?? ? ? ?? ?? comment ?? ? ? ?? ?? ? ?? ? ? ? ? ?? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ??? ? ?? ? ?? ?? ? ? ? ? ?? ? ?? ? ?? ? ? ? ? ? ? ? ? ?? ? ? ? ? ?? ??? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ??? ? ? ? ? ? ? ? ? ? … ? ? ? ?? ?? ? ? ? ? ?? ? ? ? ?? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ?? ?? ??? ?? ? ? …? ? ? ?? ? ? ??? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? …

  6. ? ? ?? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ?? ? ? ? ? ?? ? ?? ? ?? ? ?? ? ? ?? ??? ? ? ? ?? ?? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ? ?? ?? ? ? ?? ? ?? ? ? ? ?? Time Edit ? ? ? ?? ?? ? ? ? ? ?? ? ? ? ?? ? ?? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ? ?? ?? ? ?? ? ?? ?? ? ? ?? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ? ?..? ? ? ? ? ? ? ??? ? ?? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ?? .. ? ? ?? ? ? ? ? ? ? ? ??? ? ?? ? ?? ? ?? ? ? ? ? ? ??? ?? ??? ?? ? ? ? ? ? ?? ? ?? ?? ? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ?? ? ..(? ? ? ? ? ?? ? ? ?? ?? ?? ? ? ?? )? ? ? ? ?? ? ? ??? ? ?? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ?? ?? ? ? ? ? ? ? ? ? ??? ? ?? ? ? ? ? ? ? ? ? ?? ? ? ? ? ?? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ? ?? ?? ? ? ? ? ? ? ?? ?? ? ? ?? ( ? ? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ?? ? ? ? ? ? ) ? ? ?? ? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ? ??? ? ? ?? ? ? ? ? ?? ? ? ? ? ? ??? ? ?? ? ? ?? ? ??? ?? ? ? ?? ? ?? ? ? ? ? ? ? ? ? ? ? ? ?? ? ?? ? ? ?? ? ?? ? ? ? ? ? ?? ?? ? ? ? ? ? ? ??? ? ? ? ?? ? ??? ? ? ? ? ? ?? ??? .. ? ? ?? ? ? ?? ?? comment ?? ? ? ?? ?? ? ?? ? ? ? ? ?? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ??? ? ?? ? ?? ?? ? ? ? ? ?? ? ?? ? ?? ? ? ? ? ? ? ? ? ?? ? ? ? ? ?? ??? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ??? ? ? ? ? ? ? ? ? ? … ? ? ? ?? ?? ? ? ? ? ?? ? ? ? ?? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ?? ?? ??? ?? ? ? …? ? ? ?? ? ? ??? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? …

  7. ? ? ?? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ?? ? ? ? ? ?? ? ?? ? ?? ? ?? ? ? ?? ??? ? ? ? ?? ?? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ? ?? ?? ? ? ?? ? ?? ? ? ? ?? Time Edit ? ? ? ?? ?? ? ? ? ? ?? ? ? ? ?? ? ?? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ? ?? ?? ? ?? ? ?? ?? ? ? ?? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ? ?..? ? ? ? ? ? ? ??? ? ?? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ?? .. ? ? ?? ? ? ? ? ? ? ? ??? ? ?? ? ?? ? ?? ? ? ? ? ? ??? ?? ??? ?? ? ? ? ? ? ?? ? ?? ?? ? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ?? ? ..(? ? ? ? ? ?? ? ? ?? ?? ?? ? ? ?? )? ? ? ? ?? ? ? ??? ? ?? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ?? ?? ? ? ? ? ? ? ? ? ??? ? ?? ? ? ? ? ? ? ? ? ?? ? ? ? ? ?? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ?? ? ? ? ? ? ? ? ?? ?? ? ? ? ? ? ? ?? ?? ? ? ?? ( ? ? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ?? ? ? ? ? ? ) ? ? ?? ? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ? ??? ? ? ?? ? ? ? ? ?? ? ? ? ? ? ??? ? ?? ? ? ?? ? ??? ?? ? ? ?? ? ?? ? ? ? ? ? ? ? ? ? ? ? ?? ? ?? ? ? ?? ? ?? ? ? ? ? ? ?? ?? ? ? ? ? ? ? ??? ? ? ? ?? ? ??? ? ? ? ? ? ?? ??? .. ? ? ?? ? ? ?? ?? comment ?? ? ? ?? ?? ? ?? ? ? ? ? ?? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ??? ? ?? ? ?? ?? ? ? ? ? ?? ? ?? ? ?? ? ? ? ? ? ? ? ? ?? ? ? ? ? ?? ??? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ??? ? ? ? ? ? ? ? ? ? … ? ? ? ?? ?? ? ? ? ? ?? ? ? ? ?? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ?? ?? ??? ?? ? ? …? ? ? ?? ? ? ??? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? …

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