First quarter net sales totaled $134.4
million;
Net loss $0.08 per diluted share;
Progress made in 2016 first quarter to
reduce dealer inventory levels;
Company maintains fiscal 2016
outlook
Arctic Cat Inc. (NASDAQ:ACAT) today reported a net loss of $1.1
million, or $0.08 per diluted share, on net sales of $134.4 million
for the fiscal 2016 first quarter ended June 30, 2015. In the
prior-year quarter, Arctic Cat reported net earnings of $3.6
million, or $0.27 per diluted share, on net sales of $143.6
million.
Commented Christopher Metz, Arctic Cat’s president and chief
executive officer: “We made continued progress in the first quarter
against our stated goals to reposition the business for growth and
clean up the inventory overhang. In particular, we saw encouraging
trends in the company’s core North America ATV dealer inventory
levels and gained further market share. We remain focused on
partnering with our dealers to aggressively reduce non-current
inventory and provide marketing support, enabling a return to
wholesale and retail growth of new, innovative products.”
Added Metz: “During the first quarter, we implemented
initiatives to fuel product innovation and growth, speed
organizational change and leverage our efficiency. We are confident
that we have the strategy and a talented team to execute. We remain
on track with our stated long-range plan.”
The company’s key strategies under new leadership aim to:
dramatically improve its dealer network; ramp up end-user focused
new products; pursue OEM partnerships and bolt-on acquisitions; and
create a brand marketing powerhouse.
Operating Review
Arctic Cat’s fiscal 2016 first quarter net sales were down 6
percent to $134.4 million and in line with the company’s
expectations versus $143.6 million in the prior-year quarter.
Contributing to the 2016 first quarter sales were OEM snowmobile
shipments and the Wildcat™ recreational off-highway vehicle (ROV)
line, led by the Wildcat Trail side-by-side model.
Gross profit and gross profit margin in the 2016 first quarter
were approximately $22.6 million and 16.8 percent, respectively,
compared to $30.8 million and 21.4 percent, respectively, in the
prior-year quarter, primarily due to anticipated lower sales
volumes and foreign currency exchange impact. Approximately $6.6
million, or $0.33 per diluted share, of the year-over-year
reduction in gross profit was due to unfavorable foreign currency
exchange rates. Operating loss in the 2016 first quarter was $1.5
million versus operating profit of $5.6 million in the same quarter
last year.
Arctic Cat ended the 2016 first quarter with cash and cash
equivalents totaling $20.3 million at June 30, 2015, compared to
$24.3 million a year ago.
Business Line Results
ATVs/Side-by-Sides – Sales of Arctic Cat’s ATVs and
side-by-side ROVs in the 2016 first quarter totaled $52.9 million,
down 17 percent compared to prior-year sales of $63.8 million.
While sales of Wildcat ROVs remained strong, core ATV sales
decreased as planned, as the company continued to lower core ATV
inventory at its North America dealers.
“Exciting new product development plans are on track,” said
Metz. “In addition, we will be unveiling key initiatives to our
wheeled product dealers at our dealer show in August.”
Snowmobiles – Snowmobile sales in the fiscal 2016 first
quarter totaled $58.2 million, up 4 percent versus $56.2 million in
the prior-year quarter, chiefly due to the timing of OEM
shipments.
Parts, Garments & Accessories – Sales of parts,
garments and accessories (PG&A) in the fiscal 2016 first
quarter were down 2 percent to $23.3 million versus $23.7 million
in the prior-year quarter. In March 2015, Arctic Cat announced it
completed the acquisition of privately held MotorFist, LLC, a
manufacturer of high-performance technical riding gear. The
acquisition complements Arctic Cat’s garment and riding-gear
business.
Commented Metz: “The integration of our MotorFist acquisition is
proceeding smoothly. We expect sales of MotorFist branded products
to contribute to our PG&A business in fiscal 2016.”
Fiscal 2016 Full-Year
Outlook
Arctic Cat is maintaining its fiscal 2016 full-year guidance.
For the fiscal year ending March 31, 2016, Arctic Cat estimates
full-year net sales in the range of $690 million to $705 million,
assuming an unfavorable foreign currency exchange impact on sales
in the range of $12 million to $15 million pre-tax. Arctic Cat
expects fiscal 2016 full-year net earnings to increase and be in
the range of $0.80 to $0.95 per diluted share, after reflecting
unfavorable foreign currency exchange rates. Foreign currency
exchange headwinds are estimated to negatively impact gross profit
and reduce net earnings in the range of $0.60 to $0.70 per diluted
share, which will only partially be offset by the company’s hedging
strategy.
Stated Metz: “As we’ve said, our focus over the next year is to
rebuild and reposition the company for a return to long-term growth
in fiscal 2017 and beyond. To achieve this, a key priority remains
rightsizing our core North America ATV dealer inventory levels
during fiscal 2016. We believe that we have strong strategic plans
to turn the business around. Our strong balance sheet gives us the
flexibility to make investments to grow the business through
innovative products, strategic and OEM partnerships, and bolt-on
acquisitions. Although we face significant challenges in fiscal
2016, including continued foreign currency headwinds, we see
tremendous opportunities to improve the company’s operations,
expand gross margins and enhance financial performance over time.
We are excited about Arctic Cat’s long-term future.”
Conference Call
A conference call is scheduled for 10 a.m. CT (11 a.m. ET)
today. To listen to the live call, dial 1-877-876-9177, passcode
3862993. A telephone replay will be available through Wednesday,
July 29, 2015, by dialing 1-888-203-1112, passcode 3862993. To
access the live webcast or webcast replay, go to www.arcticcat.com,
investors, and click on the webcast icon.
About Arctic Cat
The Arctic Cat brand is among the most widely recognized and
respected in the recreational vehicle industry. The company
designs, engineers, manufactures and markets all-terrain vehicles
(ATVs), side-by-sides and snowmobiles, in addition to related
parts, garments and accessories under the Arctic Cat® and
MotorFist® brand names. Arctic Cat Inc. is headquartered in
Minneapolis, Minnesota. 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
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 2016 outlook, business strategy, expected
inventory reductions, product introductions and 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 those set forth in the company’s
Annual Report on Form 10-K for the year ended March 31, 2015, 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.
ARCTIC CAT INC. Financial Highlights (000s
omitted, except per share amounts) (Unaudited)
Three Months
Ended
June 30, 2015 2014 Net Sales Snowmobile & ATV Units $ 111,105 $
119,978 Parts, Garments & Accessories 23,276
23,661 Total Net Sales 134,381 143,639 Cost of Goods
Sold Snowmobile & ATV Units 96,957 97,701 Parts, Garments &
Accessories 14,862 15,137 Total Cost of
Goods Sold 111,819 112,838 Gross Profit
22,562 30,801 Operating Expenses Selling & Marketing 8,955
6,981 Research & Development 6,003 5,346 General &
Administrative 9,151 12,904 Total
Operating Expenses 24,109 25,231
Operating Profit (Loss) (1,547 ) 5,570 Other Income (Expense)
Interest Income - 4 Interest Expense (114 ) (40 )
Total Other Expense (114 ) (36 ) Earnings (Loss)
Before Income Taxes (1,661 ) 5,534 Income Tax Expense (Benefit)
(605 ) 1,965 Net Earnings (Loss) $ (1,056 ) $
3,569 Net Earnings (Loss) Per Share Basic $ (0.08 ) $ 0.28
Diluted $ (0.08 ) $ 0.27 Weighted Average
Shares Outstanding: Basic 12,958 12,896
Diluted 12,958 13,082
June 30,
Selected Balance Sheet Data:
2015 2014 Cash and Cash Equivalents
$
20,278
$
24,273 Accounts Receivable, net 40,088 33,194 Inventories 169,543
185,264 Total Assets 333,499 320,254 Total Current Liabilities
108,394 122,671 Long-term Debt 30,877 - Shareholders' Equity
179,501 184,794 Three Months
Ended June 30,
Product Line Data:
2015 2014 Change
Snowmobiles $ 58,231 $ 56,152 4 % All-Terrain Vehicles 52,874
63,826 -17 % Parts, Garments & Accessories 23,276
23,661 -2 % Total Sales $ 134,381 $ 143,639 -6 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150722005238/en/
Arctic Cat Inc.Christopher Eperjesy, 763-354-1791Chief
Financial OfficerorPadillaCRTShawn Brumbaugh,
612-455-1754shawn.brumbaugh@padillacrt.com
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