Arctic Cat Reports Fiscal 2014 Results

  Arctic Cat Reports Fiscal 2014 Results

 Fourth-quarter net sales rose 28 percent to $145.4 million, fueled by strong
                       sales of the new Wildcat Trail;
         Fourth-quarter net loss improved to $0.12 per diluted share;
  Full-year diluted EPS was $2.90 on increased net sales of $730.5 million;
                     Company provides fiscal 2015 outlook

Business Wire

MINNEAPOLIS -- May 15, 2014

Arctic Cat Inc. (NASDAQ:ACAT) today reported an improved net loss of $1.5
million, or a loss of $0.12 per diluted share, on a 28 percent net sales
increase to $145.4 million in the fiscal fourth quarter ended March 31, 2014.
In the prior-year fourth quarter, Arctic Cat reported a net loss of $5.1
million, or a loss of $0.38 per diluted share, on net sales of $113.2 million.

Commented Arctic Cat’s chairman and chief executive officer Claude Jordan:
“The business posted strong double-digit sales gains on increased sales across
all product lines and improved bottom-line results. We were pleased with the
demand for our new Wildcat Trail side-by-side, as well as the Wildcat X. Our
priorities remain to further advance our growth strategy through new product
introductions and international expansion, while enhancing our operating

Among the highlights of Arctic Cat’s fiscal 2014 fourth-quarter and full-year
financial results compared with the prior-year periods:

  *Net sales grew approximately 28 percent for the quarter, led by
    contributions from the new Wildcat™ Trail and Wildcat™ X side-by-sides.
  *Gross profit margin improved to 13.8 percent compared to 12.0 percent in
    the prior-year quarter due to higher volumes.
  *Operating expenses were nearly flat at $22.7 million versus $22.4 million.
    The company continued to increase investment in research and development,
    which was up 7 percent in the fourth quarter and 16 percent for the full
    year, to ensure a strong pipeline of new products and technologies, while
    maintaining strict cost controls.
  *Operating loss improved to $2.6 million versus a loss of $8.8 million in
    the year-ago quarter.
  *At fourth-quarter end, cash and short-term investments totaled $82.5
    million and the company had no debt.

Reflecting Arctic Cat’s ongoing commitment to enhancing shareholder return,
the company repurchased 538,198 shares at a cost of $23.4 million in the 2014
fourth quarter. Arctic Cat has $2.1 million remaining under its current share
repurchase authorization. The company also paid cash dividends of $0.10 per
share in the 2014 fourth quarter.

For the 2014 full-year, Arctic Cat reported net earnings of $39.4 million, or
$2.90 per diluted share, on net sales of $730.5 million. Sales in 2014 were up
9 percent with increases in all three business segments; however, earnings
were reduced by $0.30 per diluted share, due to an unfavorable Canadian
currency impact in the second half of the year. Full-year gross profit margins
were lower, primarily as a result of product mix and the unfavorable Canadian
currency impact, but within the company’s previously estimated range.

“Higher sales volumes driven by new product introductions, combined with our
ongoing focus on operational excellence and cost controls, allowed us to
overcome the negative Canadian currency impact and led to another year of
solid earnings per share,” said Jordan.

Business Line Results
ATVs/Side-by-Sides – Sales of Arctic Cat’s all-terrain vehicles (ATVs) and
side-by-sides increased 21 percent in the 2014 fourth quarter to $106.0
million, up from $87.6 million in the same period last year. Contributing to
sales in the quarter was the new Wildcat Trail sport side-by-side model, as
well as the continued success of the Wildcat X, a high-horsepower sport
side-by-side model. Full-year ATV/side-by-side sales rose 11 percent to $333.2
million in fiscal 2014, chiefly due to increased Wildcat sales, and accounted
for approximately 46 percent of the company’s fiscal 2014 total sales. Arctic
Cat remains focused on further increasing its ATV/side-by-side business as a
percent of total sales.

Said Jordan: “Our side-by-side business gained further momentum in the 2014
fourth quarter, led by sales of our newest Wildcat model. With the successful
launch of our Wildcat Trail, we have entered a new growth segment of the sport
side-by-side market. When we combine the Wildcat Trail with our other leading
Wildcat models, we believe we have a winning proposition in the sport
side-by-side market.”

Arctic Cat began shipping a few Wildcat Trail models in the fiscal 2014 third
quarter; however, most orders began to be filled in the fiscal 2014 fourth
quarter. This model offers a narrower 50-inch wide, trail-legal platform that
allows riders access to authorized ATV trails, making it a versatile option
for consumers. In addition to its trail legal capabilities, the Wildcat Trail
also offers industry-leading horsepower and suspension, coupled with the
lowest price in the 50-plus horsepower segment.

“Our 17 percent side-by-side retail sales growth, combined with our 3.5
percent ATV retail sales increase, resulted in North America market share
gains in both categories during our fiscal 2014,” said Jordan. “This makes
Arctic Cat the only OEM to gain market share in both the North American
snowmobile and ATV segments during the fiscal year.”

Snowmobiles – Snowmobile sales in the fiscal 2014 fourth quarter were $6.4
million, as Arctic Cat typically ships few snowmobiles in this period.
Full-year snowmobile sales increased 7 percent to $282.4 million compared to
$263.7 million for fiscal 2013.

Commented Jordan: “Our 2014 snowmobile line-up included exciting new models
and engine choices that were well received by dealers and consumers. During
the year, we gained the most market share in the industry, with our retail
sales growing more than 19 percent versus 11 percent for the industry. Our
significant increase in retail sales lowered dealer inventory by 9 percent,
which positions us well for future snowmobile sales.”

Arctic Cat introduced its first designed and built snowmobile engine in model
year 2014. Called the 6000 C-TEC2, it became the #1 selling snowmobile in the
United States’ 125 horsepower performance segment. This powerful, lightweight
and fuel-efficient 2-stroke engine enabled the company to enter the large
600cc snowmobile market segment that accounts for 18 percent of the snowmobile

Added Jordan: “Our strategic co-branding partnership with Yamaha has exceeded
our expectations and contributed to increased volume and improved operating
profits in fiscal 2014 compared to the prior year. We expect to realize
continued benefits from this collaboration in the future.”

Parts, Garments & Accessories – Sales of parts, garments and accessories
(PG&A) in the fiscal 2014 fourth quarter totaled $33.1 million, up 7 percent
compared to $31.0 million in the prior-year quarter. Contributing to increased
PG&A sales in the fourth quarter were sales of snow-related accessories and
garments, due to favorable snowmobile riding conditions, and Wildcat-related
accessories. Full-year PG&A sales increased 6 percent to $114.9 million
compared to $108.1 million for fiscal 2013, primarily driven by improved parts

Fiscal 2015 Full-Year Outlook
“We anticipate results in fiscal 2015 to be fueled by our strong pipeline of
innovative new products and technologies, further market share gains in the
growing side-by-side segment and ongoing leverage in our cost structure.
However, our business will face significant headwinds in fiscal 2015. The
current weakness of the Canadian dollar will reduce our fiscal 2015 sales and
earnings, as approximately 30 percent of our sales are exported to Canada.
Even so, we are targeting to deliver the highest sales in the history of
Arctic Cat,” said Jordan.

For the fiscal year ending March 31, 2015, Arctic Cat anticipates net sales in
the range of $775 million to $786 million, with unfavorable Canadian currency
exchange expected to reduce consolidated net sales by approximately $12
million or 1.5 percent. The company estimates that fiscal 2015 earnings per
share will be in the range of $2.33 to $2.43 per diluted share, which includes
an unfavorable Canadian currency impact of $0.79 per diluted share.

Arctic Cat’s fiscal 2015 outlook includes the following assumptions versus the
prior fiscal year: core ATV North America industry retail sales flat to up 2
percent; side-by-side North America industry retail sales up 6 percent to 9
percent; snowmobile North America industry retail sales flat to up 3 percent;
achieving slightly higher operating expense levels as a percent of sales
primarily due to the Canadian currency hedge benefit received during fiscal
year 2014; and increasing cash flow from operations. The company expects gross
margins to be down 110 basis points, chiefly due to Canadian currency and, to
a lesser extent, product mix and tooling amortization.

“Although we will be challenged this year, given the significant weakness of
the Canadian dollar, we remain excited about the underlying strength of our
business, product portfolio and future growth prospects, and we remain
committed to shareholder value creation,” Jordan said.

Conference Call
A conference call is scheduled for 10 a.m. CT (11 a.m. ET) today. To listen to
the live call dial 1-800-762-8779. The webcast may be accessed through the
investor relations section of In addition, a
telephone replay will be available through May 22, 2014, by dialing
1-800-406-7325, passcode 4682438#.

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

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 2015 outlook, business strategy, benefits of our co-branding
partnership with Yamaha and expected product demand. 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; unexpected delays in the introduction of new products; 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, 2013, 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.

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

                 Three Months Ended            Twelve Months Ended
                   March 31,                     March 31,
                   2014          2013            2014          2013
Net Sales                                                     
Snowmobile &       $ 112,323       $ 82,251        $ 615,608       $ 563,464
ATV Units
Garments &          33,085      30,980        114,883     108,124 
Total Net            145,408         113,231         730,491         671,588
Cost of Goods
Snowmobile &         104,057         78,558          506,707         450,291
ATV Units
Garments &          21,319      21,084        72,705      70,401  
Total Cost of       125,376     99,642        579,412     520,692 
Goods Sold
Gross Profit         20,032          13,589          151,079         150,896
Selling &            9,192           8,536           38,028          37,402
Research &           6,707           6,264           23,998          20,693
General &           6,755       7,620         28,557      32,087  
Operating           22,654      22,420        90,583      90,182  
Operating            (2,622  )       (8,831  )       60,496          60,714
Profit (Loss)
Other Income
Interest             8               22              30              49
Interest            14          -             (122    )    (84     )
Total Other
Income              22          22            (92     )    (35     )
(Loss) Before        (2,600  )       (8,809  )       60,404          60,679
Income Taxes
Income Taxes        (1,051  )    (3,734  )      21,000      20,934  
Net Earnings       $ (1,549  )   $ (5,075  )     $ 39,404     $ 39,745  
Net Earnings
(Loss) Per
Basic              $ (0.12   )   $ (0.38   )     $ 2.97       $ 3.02    
Diluted            $ (0.12   )   $ (0.38   )     $ 2.90       $ 2.89    
Average Shares
Basic               13,088      13,186        13,275      13,155  
Diluted             13,088      13,186        13,598      13,761  

                                    March 31,
Selected Balance Sheet Data:        2014       2013
Cash and Short-term Investments     $  82,532        $  112,807
Accounts Receivable, net                42,003            30,296
Inventories                             140,652           96,389
Total Assets                            342,294           306,145
Short-term Bank Borrowings              0                 0
Total Current Liabilities               148,541           127,292
Long-term Debt                          0                 0
Shareholders' Equity                    185,043           174,472

                Three Months Ended                        Twelve Months Ended
                March 31,                            March 31,                 
Product       2014        2013          Change    2014        2013        Change
Line Data:
Snowmobiles     $ 6,382     $ (5,318  )     220.0 %     $ 282,442   $ 263,693     7.1  %
All-Terrain       105,941       87,569        21.0  %       333,166       299,771     11.1 %
Garments &       33,085     30,980       6.8   %      114,883    108,124     6.3  %
Total Sales     $ 145,408   $ 113,231      28.4  %     $ 730,491   $ 671,588     8.8  %


Arctic Cat Inc.
Timothy C. Delmore, 763-354-1800
Chief Financial Officer
Shawn Brumbaugh, 612-455-1754
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