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October 31, 2012
Arctic Cat Reports Record Earnings in Fiscal 2013 Second Quarter
Net earnings in the quarter rose 17 percent to $25.0 million
"We are very pleased to report record earnings and EPS on double-digit sales gains in the fiscal 2013 second quarter, on top of a strong quarter last year," said Claude Jordan, Arctic Cat's chairman and chief executive officer. "We are beginning to benefit from our growth strategy to enter new market segments with innovative new products, such as our Wildcat pure sport side-by-side, while focusing on operational excellence and cost control. As a result, we continued to leverage higher sales volumes and a lower cost structure to again deliver profitability gains in the second quarter."
Among the highlights of Arctic Cat's fiscal 2013 second-quarter financial results versus the prior-year quarter:
For the six months ended Sept. 30, 2012, Arctic Cat's net earnings rose 41 percent to a record $27.0 million, or $1.95 per diluted share, compared to net earnings of $19.1 million, or $1.02 per diluted share, in the prior-year period. The company's year-to-date net sales increased 22 percent to $340.3 million versus net sales of $279.8 million in the first six months last year.
Business Line Results
Sales in Arctic Cat's all-terrain vehicle (ATV) business rose 19 percent to $69.7 million, up from $58.8 million in the same period last year. The increase was primarily due to strong global demand from dealers and customers for the Wildcat side-by-side.
During the fiscal 2013 second quarter, Arctic Cat began shipping its new 2013 model year ATVs/ROVs. In addition to offering the Wildcat V-Twin 1000i H.O., the company introduced the new Wildcat 1000 Limited side-by-side, which offers upgraded styling features as part of a standard package. Arctic Cat's new 2013 models also include five value-priced ATVs, such as the new 500 Core ATV. Additionally, the company introduced three new ATV packages--Limited, XT and CORE--to provide more optional features.
Jordan added, "In August, we were excited to see the Wildcat 1000 named as the top pure sport ROV by a leading industry magazine, after the editors conducted a head-to-head 'shootout' comparison against the only competing pure sport side-by-side in the market."
Arctic Cat's snowmobile sales in the fiscal 2013 second quarter rose 12 percent to $128.6 million, up from $114.7 million in the prior-year quarter. The company's new 2013 model year snowmobiles have received numerous industry awards, including: Editor's Choice for the F1100 Turbo RR (race-replica); Best High Performance for the F800 Sno Pro RR; and Best Crossover for the CrossTour 1100 Turbo.
Arctic Cat is building its 2013 model year snowmobiles on the new ProCross performance and ProClimb mountain chassis platforms, both of which offer innovative suspension, drive and braking technologies. In addition, during the fiscal 2013 second quarter, the company partnered with world champion snowmobile racer Tucker Hibbert to create a limited edition Tucker Hibbert race-replica model honed to high performance excellence and available to snowmobilers whose passion reflects the same race-winning attitude shared by Tucker Hibbert and Arctic Cat.
Arctic Cat's new 2013 model year snowmobiles also include:
Arctic Cat remains 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 in fiscal 2015.
Sales of parts, garments and accessories (PG&A) in the fiscal 2013 second quarter were down 2 percent to $30.8 million versus $31.4 million in the prior-year quarter. While sales of Wildcat accessories and parts grew significantly in the quarter, snowmobile garment sales were down versus the prior-year period. Arctic Cat continues to anticipate increased PG&A sales for the fiscal 2013 full year.
Company Raises Fiscal 2013 Sales and Earnings Outlook
"Our strategies are working and we are on track to
deliver the highest net earnings in Arctic Cat's 50-year history for fiscal
In fiscal 2013, Arctic Cat anticipates continued gains in its ATV/ROV business, fueled by the growth potential for the Wildcat and Prowler ROV 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; ROV North America industry retail sales up 10 to 20 percent; snowmobile North America industry retail sales flat to up 2 percent; Arctic Cat dealer inventories flat to down 5 percent; operating expense levels that are flat to 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 is raising its full-year sales guidance to a range of $664 million to $684 million, an increase of approximately 13 percent to 17 percent versus fiscal 2012. Assuming diluted weighted average shares of 14 million, the company now estimates that fiscal 2013 earnings per diluted share will be in the range of $2.65 to $2.75, an increase of 54 percent to 60 percent compared to fiscal 2012. Previously, the company estimated fiscal 2013 earnings per diluted share of $2.55 to $2.65 on sales of $662 million to $682 million.
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