Arctic Cat sales rise despite slow economy

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http://www.startribune.com/business/25916564.html?location_refer=Business

Arctic Cat sales rise despite slow economy
Last update: July 27, 2008 - 11:52 PM

Arctic Cat reported first-quarter results last week, and despite the slow economy sales increased 6.8 percent. Snowmobile sales increased 80 percent, helped by the timing of shipments but also by a new 177-horsepower turbocharged four-stroke engine offered in several 2009 snowmobile models. But ATVs are Arctic Cat's biggest segment. Last quarter, ATVs accounted for $53.8 million of the total $93.9 million in sales. The ATV market is flat and the company expects it to remain so until the economy starts showing signs of improvement, but Arctic Cat is seeking to maintain buyer interest by introducing new 2009 models. The growth segment of the ATV market is side-by-side utility vehicles. During the quarter, Arctic Cat showed an extension of the Prowler UTV line. The company promotes the new Prowler XTZ 1000 as the most powerful UTV in the industry. Bigger is better in the ATV line as well: Arctic Cat says the new Thundercat 1000 H2 ATV is the largest displacement machine in the industry.
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Arctic Cat Reports Fiscal 2009 First-Quarter Results
Company Reports First-Quarter Net Loss of $0.39 Per Diluted Share;

Maintains Fiscal 2009 Annual Guidance

MINNEAPOLIS--(BUSINESS WIRE)--Arctic Cat Inc. (Nasdaq:ACAT) today reported net sales increased 7 percent to $93.9 million for the fiscal 2009 first quarter ended June 30, 2008, from net sales of $87.9 million for the same period last year. The net loss for the quarter was $7.0 million, or $0.39 per diluted share, versus a net loss of $7.2 million, or $0.39 per diluted share, in the prior-year period.

“Our first-quarter results benefited from the timing of shipments to dealers for snowmobiles and parts, garments and accessories,” said Christopher A. Twomey, chairman and chief executive officer of Arctic Cat. “We continue to expect the company to return to profitability this fiscal year. While our markets will remain challenging, due to persistent weakness in the economy, and higher commodity prices pose some risk to our outlook, we are better positioned to attain modest growth and profitability in the year ahead, due to the strategic actions we took last fiscal year.”

Arctic Cat’s all-terrain vehicle (ATV) sales were down 10 percent to $53.8 million in the 2009 first quarter versus $59.7 million in the same period last year. In the current fiscal year, Arctic Cat anticipates that its ATV revenues will be flat. The company does not expect core ATV retail sales to pick up until the overall economy strengthens.

“The growth segments of the ATV market are two-passenger utility ATVs and UTVs, as well as those with the large-displacement engines,” said Twomey. “We are confident that our new Prowler XTZ 1000, Thundercat® 1000 and Thundercat TRV® fit nicely in this growth niche and are very competitive products.”

During the first quarter, Arctic Cat unveiled its new 2009 model ATVs to dealers, including an extension of the Prowler UTV line. The company’s new high-performance Prowler XTZ 1000 combines a side-by-side with an Arctic Cat-engineered 1000cc engine, making it the most powerful UTV available in the industry. New 2009 model Prowlers also are available in different engine sizes and with options such as a flatbed or big cargo box, a fully enclosed cab and customizable accessories.

Snowmobile sales increased 80 percent to $21.4 million, up from $11.9 million in the prior-year first quarter, due to the timing of shipments. “We are encouraged to see the generally high level of enthusiasm for our snowmobile business from dealers and customers,” Twomey said.

Among the highlights of Arctic Cat’s new 2009 model line-up is a 177 horsepower turbocharged four-stroke engine, which is offered in several 2009 models. This is the largest horsepower engine in the snowmobile industry and currently exceeds 2012 EPA emissions standards. In addition, the company’s mountain machines continue to be among the lightest and most powerful, and its utility line of snowmobiles, particularly important in the Canadian market, has been completely redesigned on the F3 chassis.

“Consolidating the number of chassis platforms is a result of our lean initiative to reduce design and manufacturing costs and improve margins, while offering customers exciting new, best-in-class products,” said Twomey.

Parts, garments and accessories (PG&A) sales grew 15 percent to $18.7 million versus $16.3 million in the year-ago period. PG&A benefited from both ATV- and snowmobile-related sales. New products and lower dealer inventories generated increased orders.

“We are optimistic that we will continue to grow PG&A sales, with additional focus and attention under our new leadership for this business,” said Twomey.

Outlook

For the fiscal year ending March 31, 2009, Arctic Cat expects net sales to grow between 5 percent and 8 percent, and be in the range of $650 million to $674 million, based on increased snowmobile revenues, anticipated ATV revenues and a better overall product mix. Full-year diluted earnings per share are anticipated to be in the range of $0.18 to $0.28.

Arctic Cat remains focused on achieving growth by offering innovative products that drive market share gains, lowering costs through its strategic sourcing initiative and by further leveraging its efficiency. The company expects to save approximately $5 million to $6 million in fiscal 2009 through its strategic sourcing initiatives, although these savings will be partially offset by higher commodity prices.

Arctic Cat’s second-quarter net sales, for the period ending September 30, 2008, are estimated to be in the range of $189 million to $199 million versus net sales of $205.2 million in the same period last year. The second-quarter net earnings is estimated to be in the range of $0.60 to $0.70 per diluted share versus net earnings of $13.9 million, or $0.76 per diluted share, in the prior-year quarter.

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.
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More info on the Prowler XTZ 1000 can be found at:
http://www.utvguide.net/arctic_cat_prowler_xtz1000.htm


Arctic Cat Prowler XTZ 1000
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