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Arctic Cat Reports Record EPS in Fiscal 2013 Third Quarter

  Arctic Cat Reports Record EPS in Fiscal 2013 Third Quarter

Quarterly EPS increased 41 percent to record $1.30 versus $0.92 in prior-year
                                   quarter;

 Net sales up 5 percent in quarter to $218.0 million on strong North American
                           ATV/side-by-side sales;

  Company reports record year-to-date net earnings and earnings per diluted
                                    share;

              Raising full-year earnings outlook for fiscal 2013

Business Wire

MINNEAPOLIS -- January 24, 2013

Arctic Cat Inc. (NASDAQ:ACAT) today reported record earnings per diluted share
of $1.30 on net earnings of $17.9 million for the fiscal 2013 third quarter
ended December 31, 2012, compared to prior-year earnings per diluted share of
$0.92 on net earnings of $17.0 million. Net sales in the fiscal 2013 third
quarter increased 5 percent to $218.0 million versus net sales of $207.0
million in the same quarter last year.

“We are very pleased to report record earnings per share and increased sales
in our third quarter, compared to a strong prior-year quarter of double-digit
sales and earnings gains,” said Claude Jordan, Arctic Cat’s chairman and chief
executive officer. “The company’s results are in line with our expectations
for continued top- and bottom-line growth. During the fiscal third quarter, we
made further progress on our growth strategy to enter new market segments by
introducing two new Wildcat™ pure sport side-by-sides that will begin shipping
during the fiscal fourth quarter. These included our first four-seat Wildcat
model and a high-performance, 90-plus horsepower Wildcat 1000 X model. We now
have four models in our Wildcat line, all of which we launched in the past 13
months.”

Among the highlights of Arctic Cat’s fiscal 2013 third quarter financial
results versus the prior-year quarter:

  *Net sales grew 5 percent, chiefly fueled by North American sales of
    Wildcat and Prowler side-by-sides, and all-terrain vehicles (ATVs);
  *Global ATV and side-by-side business increased sales by 28 percent;
  *Earnings per diluted share rose 41 percent to a record high, driven by
    improved earnings and a lower share count;
  *Gross margins improved 22 basis points, due to higher volumes;
  *Operating profit rose 5.7 percent;
  *Cash increased 26.6 percent to $96.6 million; and
  *The company had no long-term debt.

For the nine months ended December 31, 2012, Arctic Cat reported the highest
net earnings and earnings per diluted share in the company’s history.
Year-to-date earnings per diluted share rose 68 percent to a record $3.25 on
record net earnings of $44.8 million, compared to prior-year earnings per
diluted share of $1.94 on net earnings of $36.1 million. The company’s
year-to-date net sales increased 15 percent to $558.4 million versus net sales
of $486.8 million in the first nine months last year.

Business Line Results

Sales in Arctic Cat’s all-terrain vehicle (ATV)/side-by-side business rose 28
percent to $69.6 million, up from $54.4 million in the same period last year.
The increase was primarily due to strong global demand from dealers and
distributors for the Wildcat side-by-side. Year-to-date ATV/side-by-side sales
grew 40 percent to $212.2 million compared to $151.1 million in the first nine
months of fiscal 2012.

“Sales of Wildcat side-by-sides met our high expectations for the third
quarter and year to date,” said Jordan. “We remain pleased with consumer and
dealer enthusiasm for the Wildcat, and anticipate growing revenue
contributions from our expanding Wildcat line.”

Arctic Cat’s ATV/side-by-side business rose to 38 percent of consolidated
sales year-to-date, up from 31 percent of consolidated sales in the same
period last year. “As part of our overall growth strategy, we are focused on
further increasing our ATV/side-by-side business as a percent of Arctic Cat’s
total sales going forward, driven by innovative product launches in this
market segment,” said Jordan. “We continued to advance this goal with our
recent launch of two new Wildcat models. In addition, we have a robust new
product pipeline for future growth.”

Arctic Cat’s snowmobile sales in the fiscal 2013 third quarter were down 2
percent to $122.4 million from $125.2 million in the prior-year quarter.
Year-to-date snowmobile sales increased 5 percent to $269.0 million, up from
$257.3 million in the same period last year, led by growth in Canada and other
international markets.”

Commented Jordan: “We anticipated that this would be a tough quarterly
comparison for our snowmobile sales, as we are up against strong snowmobile
sales in the year-ago quarter. Last year, we unveiled the largest new
snowmobile introduction in the company’s history, with 23 all-new models
representing 75 percent of our offerings.”

Arctic Cat’s new 2013 model year snowmobiles have received industry awards as
the Best High Performance for the F800 Sno Pro RR (race-replica) and Best
Crossover for the CrossTour 1100 Turbo. The company’s 2013 model year
snowmobiles are built on its new ProCross™ performance and ProClimb™ mountain
chassis platforms, both of which offer innovative suspension, drive and
braking technologies.

Arctic Cat is 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.

Sales of parts, garments and accessories (PG&A) in the fiscal 2013 third
quarter were down 5 percent to $26.0 million versus $27.4 million in the
prior-year quarter. An increase in Wildcat parts and accessories sales in the
fiscal 2013 third quarter was not sufficient to offset a decline in snowmobile
garment sales, due to lower than expected early season snowfall. Year-to-date
PG&A sales totaled $77.1 million, down 2 percent from $78.4 million in the
year-ago period. For the fiscal 2013 full year, Arctic Cat continues to
anticipate increased PG&A sales of 1 percent to 3 percent.

Company Raises Fiscal 2013 Earnings Outlook

“We remain on track to deliver the highest net earnings in Arctic Cat’s
50-year history for the fiscal 2013 full year,” said Jordan. “We expect to
continue generating higher revenue and earnings by developing innovative new
products and entering new market segments. Our strategies are working and we
are raising our full-year earnings guidance.”

In fiscal 2013, Arctic Cat anticipates continued gains in its ATV/side-by-side
business, fueled by the growth potential for the Wildcat and Prowler
side-by-side 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; side-by-side North America industry retail sales up 10 to 20 percent;
snowmobile North America industry retail sales down 2 percent to up 2 percent;
Arctic Cat dealer inventories flat to up 5 percent; operating expense levels
that are 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 now estimates that
fiscal 2013 earnings per diluted share will be in the range of $2.75 to $2.85,
an increase of 60 percent to 66 percent compared to fiscal 2012. Previously,
the company estimated fiscal 2013 earnings of $2.65 to $2.75 per diluted
share. The company continues to anticipate sales for the full 2013 fiscal year
in the range of $664 million to $684 million, an increase of approximately 13
percent to 17 percent versus fiscal 2012.

Board Additions

Arctic Cat added two new members to its board of directors in the fiscal 2013
third quarter. Joe Puishys is president and CEO of Apogee Enterprises and Stan
Askren is chairman and CEO of HNI Corporation. Arctic Cat now has eight
members on its board of directors, the majority of whom are independent.

“We look forward to benefiting from their insights, as we pursue continued
growth and enhanced operational efficiency,” said Jordan.

Conference Call

Arctic Cat will host a conference call to discuss the fiscal 2013 third
quarter results today, January 24, 2013, at 9:30 a.m. CT (10:30 a.m. ET). To
listen to the live call, dial toll-free 1-877-941-0843. The live webcast and
replay also may be accessed through the investor relations section of
www.arcticcat.com/corporate. In addition, a telephone replay will be available
through January 31, 2013, by dialing 1-800-406-7325, pass code: 4592024.

About Arctic Cat

Arctic Cat Inc. designs, engineers, manufactures and markets all-terrain
vehicles (ATVs), side-by-sides and snowmobiles under the Arctic Cat® brand
name, as well as related parts, garments and accessories. Its common stock is
traded on the Nasdaq Global Select Market under the ticker symbol “ACAT.” More
information about Arctic Cat and its products is available 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, its Quarterly Reports on Form 10-Q and other
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 including statements related to our
fiscal 2013 outlook. 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, pricing and sales incentives; increase in material or
production cost which cannot be recouped in product pricing; changes in the
sourcing of engines; interruption of dealer floorplan financing; warranty
expenses and product recalls; foreign currency exchange rate fluctuations;
product liability claims and other legal proceedings in excess of reserves or
insured amounts; environmental and product safety regulatory activity; effects
of the weather; general economic conditions and political changes; interest
rate changes; consumer demand and confidence; and those set forth in the
Company’s Annual Report on Form 10-K for the year ended March 31, 2012, under
heading “Item 1A. Risk Factors.” The Company does not undertake any obligation
to publicly update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.

ARCTIC CAT INC.                                           
Financial
Highlights
(000s omitted, except per share
amounts)
(Unaudited)
                       Three Months Ended              Nine Months Ended
                       December 31,                December 31,
                        2012       2011             2012       2011
Net Sales
Snowmobile & ATV       $ 191,986     $ 179,659         $ 481,213     $ 408,378
Units
Parts, Garments &       26,030     27,363           77,144     78,403
Accessories
Total Net Sales          218,016       207,022           558,357       486,781
Cost of Goods Sold
Snowmobile & ATV         150,177       142,541           371,733       320,513
Units
Parts, Garments &       17,041     16,704           49,317     47,067
Accessories
Total Cost of           167,218    159,245          421,050    367,580
Goods Sold
Gross Profit             50,798        47,777            137,307       119,201
Operating Expenses
Selling &                10,041        10,186            28,866        28,431
Marketing
Research &               5,084         4,773             14,429        12,596
Development
General &               8,002      6,635            24,467     22,664
Administrative
Total Operating         23,127     21,594           67,762     63,691
Expenses
Operating Profit         27,671        26,183            69,545        55,510
Other Income
(Expense)
Interest Income          10            23                27            68
Interest Expense        (2)        (1)              (84)       (7)
Total Other Income      8          22               (57)       61
(Expense)
Earnings Before          27,679        26,205            69,488        55,571
Income Taxes
Income Taxes            9,826      9,177            24,668     19,455
Net Earnings           $ 17,853    $ 17,028          $ 44,820    $ 36,116
Net Earnings Per
Share
Basic                  $ 1.35      $ 0.96            $ 3.41      $ 2.00
Diluted                $ 1.30      $ 0.92            $ 3.25      $ 1.94
                                                                     
Weighted Average
Shares
Outstanding:
Basic                   13,220     17,721           13,144     18,054
Diluted                 13,684     18,489           13,796     18,633
                                                                     
                                     December 31,
Selected Balance                      2012             2011
Sheet Data:
Cash and
Short-term                           $ 96,621          $ 76,296
Investments
Accounts                               50,769            52,187
Receivable, net
Inventories                            97,027            87,867
Total Assets                           308,189           279,207
Short-term Bank                        0                 0
Borrowings
Total Current                          125,061           134,894
Liabilities
Long-term Debt                         0                 0
Shareholders'                          179,733           142,227
Equity
                                                                     

                                                                             
                  Three Months Ended                       Nine Months Ended
                  December 31,                       December 31,               
Product         2012       2011       Change    2012       2011       Change
Line Data:
Snowmobiles       $ 122,425   $ 125,227       -2%        $ 269,011   $ 257,258       5%
All-Terrain         69,561        54,432        28%          212,202       151,120       40%
Vehicles
Parts,
Garments &         26,030     27,363        -5%         77,144     78,403        -2%
Accessories
Total Sales       $ 218,016   $ 207,022       5%         $ 558,357   $ 486,781       15%

Contact:

Arctic Cat Inc.
Timothy C. Delmore, 763-354-1800
Chief Financial Officer
or
Padilla Speer Beardsley Inc.
Shawn Brumbaugh, 612-455-1754
sbrumbaugh@padillaspeer.com
 
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