EX-99.1 2 a10-2521_1ex99d1.htm EX-99.1
Exhibit 99.1
 
NEWS RELEASE
 

CONTACTS:

 

Arctic Cat Inc.

 

Padilla Speer Beardsley Inc.

 

 

Timothy C. Delmore

 

Shawn Brumbaugh

 

 

Chief Financial Officer

 

612/455-1754

 

 

763-354-1800

 

 

 

Arctic Cat Reports Fiscal 2010 Third-Quarter Results

 

Company reports net earnings of $0.14 per diluted share in quarter versus $0.15 loss;

Third-quarter operating profit up by $4.5 million;

Continued to improve cost structure and gross margin percentage, and strengthen balance sheet;

Company maintains annual revenue guidance

 

MINNEAPOLIS, January 27, 2010 — Arctic Cat Inc. (NASDAQ: ACAT) today reported net earnings of $2.6 million, or $0.14 per diluted share, on net sales of $131.0 million for the third quarter ended December 31, 2009. Arctic Cat reported a net loss in the prior-year third quarter of $2.7 million, or $0.15 per diluted share, on net sales of $174.7 million.

 

In the first nine months, Arctic Cat reported net earnings of $11.4 million, or $0.63 per diluted share, compared to prior-year net earnings of $7.2 million, or $0.40 per diluted share. Arctic Cat’s net sales in the first nine months of fiscal 2010 totaled $366.7 million versus $472.9 million in the same period last year.

 

Commented Arctic Cat’s chairman and chief executive officer Christopher A. Twomey: “We are pleased with the company’s further progress in delivering improved operating results during the third quarter and year to date, particularly given the continued difficult selling conditions in the power sports market. Our focus on lowering Arctic Cat’s cost structure through lean manufacturing efficiencies, low-cost sourcing and expense controls led to higher gross margins and operating profits. In addition, our efforts to reduce inventories resulted in a much stronger balance sheet.”

 

Among the highlights of Arctic Cat’s 2010 third-quarter and year-to-date financial results versus the same period last year:

 



 

·                 Gross margins increased 550 basis points and 350 basis points year to date;

·                 Operating expenses declined 9 percent to $22.0 million from $24.2 million, and fell 14 percent year to date;

·                 Operating profit for the quarter jumped $4.5 million to $624,000 from a loss of $3.9 million; operating profit is up 63 percent year to date;

·                 Inventories were reduced 29 percent to $106.3 million from $150.4 million;

·                 Total cash and short-term investments at quarter end rose to $50.4 million up from $5.4 million; and

·                 The company had no short- or long-term debt at quarter end.

 

During the third quarter, Arctic Cat announced on October 20, 2009, that it entered into an agreement for GE Capital, Commercial Distribution Finance to become the exclusive provider of floorplan financing for Arctic Cat’s U.S. dealers. The new multi-year financing program replaces Arctic Cat’s financing agreement with Textron Financial Corporation, which is exiting the dealer floorplan business.

 

Arctic Cat also announced on November 12, 2009, a new three-year, $60 million senior secured revolving credit facility. The facility is available for the company’s ongoing working capital needs and general corporate purposes. Bank of America, N.A., structured and underwrote the new facility, which replaces an existing credit facility that was scheduled to expire in March 2010.

 

Business Line Results

 

“We are successfully rescaling Arctic Cat’s business to achieve improved profitability in the current lower-demand environment for recreational products,” said Twomey. “A key part of our strategy this fiscal year has been to reduce dealer inventories, in order to position the company for future growth when the retail power sports market recovers.”  Year to date, Arctic Cat’s overall dealer inventories are down 19 percent.

 

Snowmobile sales totaled $58.7 million in the third quarter compared to $90.9 million in the prior-year quarter. Year-to-date Arctic Cat snowmobile sales were $162.3 million versus $210.7 million in the same period last year. While overall North American retail snowmobile sales for the industry are down year to date, Arctic Cat’s retail sales have outperformed the industry and the company has gained market share. Arctic Cat has increased its North American market share by offering consumers leading-edge technologies, such as the new

 



 

powered-up 800cc engine that is being introduced in its new models across all market segments.

 

All-terrain vehicle (ATV) sales totaled $48.2 million in the third quarter versus $57.8 million in the prior-year quarter. Year-to-date ATV sales were $132.1 million compared to $183.2 million in the first nine months of fiscal 2009. The economic slowdown over the past year has resulted in lower industry wide retail sales of ATVs, although Arctic Cat’s retail ATV sales have outperformed the industry and the company has gained market share. During the current fiscal year, the company has launched seven new 2010 ATV models and is introducing power steering on select units in the fourth quarter.

 

Sales of parts, garments and accessories (PG&A) in the second quarter totaled $24.2 million versus $26.1 million in the prior-year quarter. Year-to-date PG&A sales were $72.3 million compared to $79.1 million in the year-ago period.

 

Outlook

 

Arctic Cat is implementing operational efficiency initiatives aimed at returning the company to long-term profitability on lower anticipated sales volumes. The company’s fiscal 2010 outlook includes the following assumptions: the continuation of the weak global economic environment negatively impacting sales of recreational products; increasing gross margins up to 300 basis points through global low-cost sourcing, improved commodity pricing and greater efficiencies from lean manufacturing; achieving a 12 percent to 17 percent reduction in operating expenses; improving cash flow from operations; and ending the year with more cash on the balance sheet by lowering inventory.

 

Arctic Cat continues to estimate sales for its fiscal year ending March 31, 2010, in the range of $425 million to $460 million. The company has not provided fiscal 2010 earnings per share guidance, although it expects improved per share results compared with fiscal 2009.

 

“We remain focused on achieving continued operational efficiencies and are on track to deliver improved operating results this fiscal year on anticipated lower sales,” said Twomey.

 

Conference Call

 

A conference call is scheduled for 10:30 a.m. CT (11:30 a.m. ET) today. To listen to the live webcast or replay of this call via the Internet, go to the corporate portion of the company’s website at www.arcticcat.com. To listen to a telephone replay of the conference call, dial 800-406-7325 and enter conference call passcode 4205606. The telephone replay will be available through Wednesday, February 3, 2010.

 



 

About Arctic Cat

 

Arctic Cat Inc. designs, engineers, manufactures and markets all-terrain vehicles (ATVs) 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 Report on Form 8-K 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. 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 and pricing; cost and availability of financing for the Company, our dealers and our suppliers; increase in material or production cost which cannot be recouped in product pricing; changes in the sourcing of snowmobile engines from Suzuki; warranty expenses; foreign currency exchange rate fluctuations; product liability claims and other legal proceedings in excess of insured amounts; environmental and product safety regulatory activity; effects of the weather; overall economic conditions; and consumer demand and confidence. 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 TABLES FOLLOW

 



 

ARCTIC CAT INC.

Financial Highlights

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

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2009

 

2008

 

2009

 

2008

 

Net Sales

 

 

 

 

 

 

 

 

 

Snowmobile & ATV Units

 

$

106,879

 

$

148,616

 

$

294,433

 

$

393,832

 

Parts Garments & Accessories

 

24,161

 

26,083

 

72,277

 

79,058

 

Total Net Sales

 

131,040

 

174,699

 

366,710

 

472,890

 

Cost of Goods Sold

 

 

 

 

 

 

 

 

 

Snowmobile & ATV Units

 

94,080

 

136,325

 

248,170

 

340,984

 

Parts Garments & Accessories

 

14,379

 

18,007

 

43,200

 

51,540

 

Cost of Goods Sold

 

108,459

 

154,332

 

291,370

 

392,524

 

Gross Profit

 

22,581

 

20,367

 

75,340

 

80,366

 

Operating Expenses

 

 

 

 

 

 

 

 

 

Selling & Marketing

 

8,941

 

12,728

 

24,982

 

35,118

 

Research & Development

 

2,979

 

4,206

 

9,177

 

13,135

 

General & Administrative

 

10,037

 

7,284

 

27,323

 

23,598

 

Total Operating Expenses

 

21,957

 

24,218

 

61,482

 

71,851

 

Operating Profit (Loss)

 

624

 

(3,851

)

13,858

 

8,515

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

Interest Income

 

 

17

 

4

 

116

 

Interest Expense

 

(2

)

(323

)

(249

)

(941

)

Total Other Income (Expense)

 

(2

)

(306

)

(245

)

(825

)

Earnings (Loss) Before Income Taxes

 

622

 

(4,157

)

13,613

 

7,690

 

Income Tax Expense (Benefit)

 

(1,980

)

(1,433

)

2,178

 

462

 

Net Earnings (Loss)

 

$

2,602

 

(2,724

)

11,435

 

7,228

 

Net Earnings (Loss) Per Share

 

 

 

 

 

 

 

 

 

Basic

 

$

0.14

 

$

(0.15

)

$

0.63

 

$

0.40

 

Diluted

 

$

0.14

 

$

(0.15

)

$

0.63

 

$

0.40

 

Weighted Average Shares Outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

18,228

 

18,092

 

18,217

 

18,063

 

Diluted

 

18,297

 

18,092

 

18,249

 

18,068

 

 

 

 

December 31,

 

Selected Balance Sheet Data:

 

2009

 

2008

 

Cash and Short-term Investments

 

$

50,356

 

$

5,431

 

Accounts Receivable, net

 

43,008

 

59,679

 

Inventories

 

106,264

 

150,397

 

Total Assets

 

267,077

 

298,048

 

Short-term Bank Borrowings

 

0

 

9,030

 

Total Current Liabilities

 

82,788

 

104,343

 

Long-term Debt

 

0

 

0

 

Shareholders’ Equity

 

179,710

 

182,352

 

 



 

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

 

 

December 31,

 

 

 

December 31,

 

 

 

Product Line Data:

 

2009

 

2008

 

Change

 

2009

 

2008

 

Change

 

Snowmobiles

 

$

    58,665

 

$

   90,865

 

-35

%

$

 162,321

 

$

 210,660

 

-23

%

All-terrain Vehicles

 

48,214

 

57,751

 

-17

%

132,112

 

183,172

 

-28

%

Parts, Garments & Accessories

 

    24,161

 

   26,083

 

-7

%

   72,277

 

   79,058

 

-9

%

Total Sales

 

$

  131,040

 

$

 174,699

 

-25

%

$

 366,710

 

$

 472,890

 

-22

%

 

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