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.
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ARCTIC CAT INC. Financial Highlights (000s omitted, except per share amounts)(Unaudited) |
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| 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 | ||||||
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Three Months Ended |
Nine Months Ended |
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December 31 |
December 31 |
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Product Line Data: |
2010 |
2009 |
Change |
2010 |
2009 |
Change |
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| 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.