Arctic Cat Reports Fiscal 2013 Results

  Arctic Cat Reports Fiscal 2013 Results

  *Fiscal 2013 sales increased 15% to $671.6 million, driven by strong ATV
    and Wildcat side-by-side sales;
  *Full-year diluted EPS up 68% to record $2.89 versus $1.72 in prior year;
  *Fiscal 2013 sales within company’s guidance range, while EPS exceeded it;
  *Company expects fiscal 2014 EPS to increase 10% to 13% and be in the range
    of $3.17 to $3.27 per diluted share

Business Wire

MINNEAPOLIS -- May 15, 2013

Arctic Cat Inc. (NASDAQ: ACAT) today reported record net earnings and earnings
per diluted share for the fiscal year ended March 31, 2013. Net earnings rose
33 percent to $39.7 million, or $2.89 per diluted share, up from prior-year
net earnings of $29.9 million, or $1.72 per diluted share. Arctic Cat’s net
sales for the fiscal 2013 full year increased 15 percent to $671.6 million
versus $585.3 million last fiscal year.

“We had another year of outstanding financial performance and are very pleased
to report record net earnings and EPS for the fiscal 2013 full year,” said
Claude Jordan, Arctic Cat’s chairman and chief executive officer. “Higher
sales volumes, combined with our ongoing focus on operational excellence and
cost control, again contributed to strong top- and bottom-line results for
fiscal 2013.”

Among the highlights of Arctic Cat’s fiscal 2013 full-year financial results
versus last fiscal year:

  *Net sales grew 15 percent, fueled by increased side-by-side, all-terrain
    vehicle (ATV) and snowmobile sales;
  *Gross profit margin improved to 22.5 percent from 22.3 percent, due to
    higher volumes and selling prices;
  *Operating expenses as a percent of sales declined to 13.4 percent compared
    to 14.5 percent;
  *Operating profit rose 32 percent to $60.7 million, up from $45.9 million;
  *The company ended the fiscal 2013 year with cash and short-term
    investments totaling $112.8 million, nearly double the $62.6 million at
    the end of fiscal 2012;
  *The company had no short- or long-term debt.

As expected, for the fiscal 2013 fourth quarter, Arctic Cat reported an
improved net loss of $5.1 million, or a loss of $0.38 per diluted share, on 15
percent net sales growth to $113.2 million. In the prior-year fourth quarter,
Arctic Cat reported a net loss of $6.2 million, or a loss of $0.49 per diluted
share, on net sales of $98.5 million. Due to the seasonality of Arctic Cat’s
business, the company typically reports lower results in its fiscal first and
fourth quarters, while the fiscal second and third quarters are historically
its strongest.

Commenting on the 2013 fourth quarter, Jordan said: “Our business performed
well in the quarter, with sales increasing across all product lines. We
continued to pursue our strategy to enter new growth segments and launch
innovative new products, including two all-new Wildcat™ sport side-by-sides.
As a result, we again had double-digit sales gains in our ATV and side-by-side
segments in the 2013 fourth quarter.”

Based on the strength of the company’s performance, strong cash flow and
future prospects, Arctic Cat’s board of directors has authorized the
reinstatement of a quarterly cash dividend and a $30 million share repurchase
program, which were announced separately today. “We are committed to enhancing
shareholder value, and are pleased to reinstate a quarterly dividend and
announce a new stock buyback program,” commented Jordan.

Business Line Results

ATVs and Side-by-Sides – Arctic Cat’s ATV/side-by-side sales increased 16
percent to $87.6 million in the fiscal 2013 fourth quarter, up from $75.8
million in the same period last year, chiefly due to strong dealer demand for
Wildcat side-by-sides and North American ATVs and Prowlers. Full-year
ATV/side-by-side sales rose 32 percent to $299.8 million, driven by ATV,
Prowler and Wildcat sales.

“We remain focused on further increasing our ATV/side-by-side business as a
percent of Arctic Cat’s total sales going forward,” said Jordan. “In the
fourth quarter, we continued to advance this goal with the launch of two new
Wildcat models. In addition, we have a robust new product pipeline for future
growth.”

In the 2013 fourth quarter, Arctic Cat introduced two all-new Wildcats that
both include industry leading rear travel of 18 inches and 13 inches of ground
clearance:

  *The Wildcat 4 1000 pure sport side-by-side seats four full-sized adults.
    Arctic Cat began shipping the Wildcat 4 to dealers in February 2013.
  *The high horsepower Wildcat X 1000 pure sport side-by-side offers 90-plus
    horsepower, and enhanced acceleration and maneuverability to those seeking
    power, suspension and handling in an off-road vehicle. Arctic Cat began
    shipping the Wildcat X to dealers in March 2013.

In addition to the Wildcat 4 and the Wildcat X, Arctic Cat announced a new
50-inch wide, trail-legal Wildcat that will begin shipping in the latter part
of fiscal 2014. Its narrower stance allows riders access to authorized ATV
trails, making it a versatile option for consumers. The Wildcat trail-legal
version builds on the success of the pure-sport Wildcat, which was recognized
as the “Best-In-Class Extreme Performance ROV” by a prominent industry
magazine.

The Wildcat is now available in: Base and Limited models; the four-seat
Wildcat 4; and the high-horsepower Wildcat X.

Snowmobiles – In the 2013 fourth quarter, Arctic Cat’s snowmobile sales
improved to a negative $5.3 million, primarily due to sales incentives, versus
negative sales of $6.8 million in the prior-year quarter. Full-year snowmobile
sales increased 5 percent to $263.7 million compared to $250.4 million last
fiscal year.

As part of Arctic Cat’s snowmobile growth strategy, the company announced in
February 2013 expanded engine supply and co-brand agreements with Yamaha Motor
Corporation, beginning with the 2014 model year. The agreement gives Arctic
Cat customers a broader range of snowmobile engine choices, including access
to select 4-stroke engines from Yamaha. In addition, Arctic Cat will build
select Yamaha snowmobiles in Arctic Cat’s Thief River Falls, Minn., factory
according to Yamaha’s specifications.

In the quarter, Arctic Cat unveiled its new 2014 snowmobile model line-up,
featuring 10 new models, including the all-new ZR 6000 El Tigre
high-performance sled. The company also introduced two new available engines:
a Yamaha 4-stroke 135 horse-power engine; and a clean 600cc 2-stroke 125
horse-power engine. The 600cc engine will be the first Arctic Cat-designed and
built snowmobile engine and will be manufactured in the company’s engine
facility in St. Cloud, Minn., beginning with the 2014 model year.

Parts, Garments & Accessories – Sales of parts, garments and accessories
(PG&A) in the fiscal 2013 fourth quarter increased 5 percent to $31.0 million
versus $29.5 million in the prior-year quarter. The growth was primarily due
to snowmobile parts sales, reflecting improved snow conditions experienced in
the northern United States. For the 2013 full year, PG&A sales were
essentially flat, although Arctic Cat had significant year-over-year
improvements in Wildcat parts and accessories.

Fiscal 2014 Full-Year Outlook

“We anticipate another year of increased sales and earnings in fiscal 2014,
fueled by a strong pipeline of innovative new products and technologies,
further market share gains in the growing side-by-side segment and continued
leverage in our cost structure,” said Jordan. “We are excited about our future
prospects and confident in our ability to deliver another year of enhanced
shareholder value and record earnings.”

Arctic Cat’s fiscal 2014 outlook includes the following assumptions versus the
prior fiscal year: core ATV North America industry retail sales flat to up 5
percent; side-by-side North American industry retail sales up 15 percent to 25
percent; snowmobile North America industry retail sales flat to up 3 percent;
Arctic Cat dealer inventories excluding new products flat to up 10 percent;
achieving slightly lower operating expense levels as a percent of sales; and
increasing cash flow from operations. The company expects gross margins to
decrease by approximately 80 basis points, due to additional Yamaha
snowmobiles that will be built in Arctic Cat’s factory and, to a lesser
extent, the Canadian currency impact.

For the fiscal year ending March 31, 2014, Arctic Cat anticipates sales in the
range of $754 million to $768 million, an increase of approximately 12 percent
to 14 percent versus fiscal 2013. Assuming diluted weighted average shares in
the range of 13.5 million to 13.8 million, the company estimates that fiscal
2014 earnings per diluted share will be in the range of $3.17 to $3.27, an
increase of 10 percent to 13 percent compared to fiscal 2013.

Conference Call

A conference call is scheduled for 10 a.m. CT (11 a.m. ET) today. To listen to
the live call dial 1-877-941-9205. The webcast may be accessed through the
investor relations section of www.arcticcat.com/corporate. In addition, a
telephone replay will be available through May 22, 2013, by dialing
1-800-406-7325, passcode 4618352#.

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, 2011, 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            Years Ended
                       March 31,                   March 31,
                       2013         2012            2013         2012
Net Sales
Snowmobile & ATV       $ 82,251      $ 68,951        $ 563,464     $ 477,329
Units
Parts, Garments &       30,980     29,536        108,124    107,939 
Accessories
Total Net Sales          113,231       98,487          671,588       585,268
Cost of Goods Sold
Snowmobile & ATV         78,558        68,010          450,291       388,523
Units
Parts, Garments &       21,084     19,059        70,401     66,126  
Accessories
Total Cost of Goods     99,642     87,069        520,692    454,649 
Sold
Gross Profit             13,589        11,418          150,896       130,619
Operating Expenses
Selling & Marketing      8,536         8,118           37,402        36,549
Research &               6,264         5,266           20,693        17,862
Development
General &               7,620      7,654         32,087     30,318  
Administrative
Total Operating         22,420     21,038        90,182     84,729  
Expenses
Operating Profit         (8,831  )     (9,620  )       60,714        45,890
Other Income
(Expense)
Interest Income          22            18              49            86
Interest Expense        -          (1      )      (84     )   (8      )
Total Other Income      22         17            (35     )   78      
(Expense)
Earnings Before          (8,809  )     (9,603  )       60,679        45,968
Income Taxes
Income Taxes            (3,734  )   (3,428  )      20,934     16,027  
Net Earnings           $ (5,075  )  $ (6,175  )     $ 39,745    $ 29,941  
Net Earnings Per
Share
Basic                  $ (0.38   )  $ (0.49   )     $ 3.02      $ 1.79    
Diluted                $ (0.38   )  $ (0.49   )     $ 2.89      $ 1.72    
                                                                   
Weighted Average
Shares Outstanding:
Basic                   13,186     12,724        13,155     16,721  
Diluted                 13,186     12,724        13,761     17,458  
                                                                   
                                                                   
                                     March 31,
Selected Balance                     2013            2012
Sheet Data:
Cash and Short-term                  $ 112,807       $ 62,597
Investments
Accounts Receivable,                   30,296          28,073
Net
Inventories                            96,389          98,702
Total Assets                           306,258         255,416
Short-term Bank                        0               0
Borrowings
Total Current                          127,424         114,035
Liabilities
Long-term Debt                         0               0
Shareholders' Equity                   174,472         138,472
                                                                   

             Three Months Ended                Years Ended           
              March 31,                        March 31,              
Product      2013         2012        Change  2013       2012       Change
Line Data:
Snowmobiles   $ (5,318  )  $ (6,820 )   22  %    $ 263,693  $ 250,438   5   %
All-Terrain     87,569        75,771     16  %      299,771     226,891   32  %
Vehicles
Parts,
Garments &     30,980     29,536    5   %     108,124   107,939   0   %
Accessories
Total Sales   $ 113,231   $ 98,487    15  %    $ 671,588  $ 585,268   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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