- Fourth-quarter net sales up 13%;
- Company posts 7th consecutive year of record sales;
- Full-year net earnings total $1.15 per diluted share on 7% net
sales increase;
- Company announces growth and profitability initiatives, and fiscal
2008 outlook
THIEF RIVER FALLS, Minn.--(BUSINESS WIRE)--May 15, 2007--Arctic
Cat Inc. (Nasdaq:ACAT) today reported net sales of $172.6 million for
the fiscal fourth-quarter ended March 31, 2007, up 13 percent compared
with net sales of $153.3 million in the same period last year. The
fourth-quarter net loss was $1.6 million, or $0.08 per diluted share,
including $0.02 per diluted share for the non-cash expense of stock
options in accordance with SFAS 123(R). The company reported a net
loss in the prior-year fourth quarter of $592,000, or $0.03 per
diluted share, which did not include the non-cash expense of stock
options.
Arctic Cat posted its seventh consecutive year of record sales,
with full-year net sales increasing 7 percent to $782.4 million
compared with $732.8 million last fiscal year. Full-year net earnings
totaled $22.1 million, or $1.15 per diluted share, versus net earnings
of $23.7 million, or $1.20 per diluted share, in fiscal 2006. The
fiscal 2007 net earnings include $0.08 per diluted share for the
non-cash expense of stock options in accordance with SFAS 123(R).
"We succeeded in posting sales gains across all of our products
lines in fiscal 2007 and achieved another year of record sales," said
Christopher A. Twomey, chairman and chief executive officer of Arctic
Cat. "We are pleased that we gained further market share in our ATV
and snowmobile businesses, as our retail sales continued to outpace
these industries. However, challenging snowmobile market conditions
caused by poor snow in the Midwest and East led to increased sales
incentive programs on snowmobiles, which dampened our overall
profitability."
During fiscal 2007, Arctic Cat repurchased approximately 1.1
million shares of its common stock. The company has approximately
$10.8 million remaining on its current $20 million share repurchase
authorization. At the end of the 2007 fourth quarter, Arctic Cat
reported $75 million in cash and no long-term debt.
Business Line Results
All-terrain vehicle (ATV) sales grew 15 percent to $145.8 million
in the 2007 fourth quarter versus $126.8 million in the same period
last year. For fiscal 2007, the company's ATV sales rose 9 percent to
$431.5 million compared with $394.9 million last year. ATV revenues
increased for the quarter and full-year due to strong contributions
from the Prowler UTV. The company also benefited from increased
international ATV sales.
"We succeeded in establishing our international dealer-direct
distribution network in all major European markets during fiscal 2007,
and we expect strong double-digit international growth in fiscal
2008," said Twomey.
During the 2007 fourth quarter, Arctic Cat began full production
of ATV engines at its new engine manufacturing facility in St. Cloud,
Minn. This facility enables the company to increase its operational
efficiency, profitability and manufacturing flexibility. Currently,
the company is producing one ATV engine at this site, with plans to
expand its engine production and add new ATV engines to its model line
during the current fiscal year.
"Looking ahead, we expect the Prowler and international sales to
drive further ATV sales growth," said Twomey. "In addition, we will
introduce new industry leading ATV products at our June dealer show.
Overall, we are very excited about our ATV growth plans."
Snowmobile sales declined in the 2007 fourth quarter and were a
negative $1.8 million, due to sales incentive accruals. In the
prior-year quarter, snowmobile sales totaled $140,000. For the 2007
fiscal year, Arctic Cat's snowmobile sales increased 4 percent to
$247.0 million compared to $238.1 million in the prior year.
"As expected, our full-year snowmobile revenues were higher in
fiscal 2007 than a year ago, fueled by the largest new model
introduction in the company's history," said Twomey. "Arctic Cat's
retail snowmobile sales outpaced the industry's overall retail sales
in fiscal 2007 on the strength of our new products."
Sales of parts, garments and accessories (PG&A) in the 2007 fourth
quarter increased 9 percent to $28.6 million versus $26.4 million in
the year-ago period, driven by increased sales of snow-related parts
and accessories during the quarter. For the full fiscal year, PG&A
sales grew 4 percent to $103.9 million, up from $99.8 million last
year, primarily due to higher sales of ATV parts and accessories.
Company Announces Growth and Profitability Initiatives
Arctic Cat is announcing three strategic initiatives designed to
better position the company for future growth and profitability.
First, the company plans to reorganize its business into three
separate units, encompassing ATVs, snowmobiles and PG&A. Each business
unit will be led by a general manager with profit and loss
responsibilities. This reorganized structure will enable the company
to better focus on growing each business. Second, Arctic Cat plans to
relocate its headquarters, certain corporate executives, general
managers, and sales and marketing personnel to the Minneapolis area by
the fall of 2007. The company's manufacturing operations will remain
in their existing locations and will not be affected. The
reorganization and corporate headquarters move is anticipated to cost
approximately $1.6 million after tax, or $0.09 per diluted share, in
fiscal 2008. The company expects that half of this amount will be a
one-time expense. Further details on the reorganization will be
announced later this year.
Third, during the current fiscal year ending March 31, 2008,
Arctic Cat plans a one-time reduction in its snowmobile production of
approximately 30 percent to help dealers lower their snowmobile
inventory levels to more closely match anticipated consumer demand in
the year ahead. As previously announced in February, the company
streamlined its workforce to better align its cost structure and
resources with the current business conditions.
"We remain enthusiastic about the snowmobile business," said
Twomey. "We expect to maintain our technological leadership and
competitive position in the snowmobile market, and will continue
investing in this business at a sustainable and profitable level going
forward."
Outlook
As a result of Arctic Cat's planned initiatives in fiscal 2008 to
improve its future profitability and growth prospects, the company
expects lower net sales for the fiscal year ending March 31, 2008, in
the range of $710 million to $736 million. Full-year diluted earnings
per share are anticipated to be in the range of $0.89 to $0.95.
Commented Twomey: "We expect continued strong growth in our ATV
business in fiscal 2008 and beyond. We have already taken steps to
size our workforce to realistically reflect the current snowmobile
market. After a one-time production adjustment in fiscal 2008, we
expect to modestly and profitably grow our snowmobile business going
forward. I am confident and excited about our long-term growth
prospects."
Arctic Cat's first-quarter net sales, for the period ending June
30, 2007, are estimated to be in the range of $70 million to $80
million versus net sales of $96.4 million in the same period last
year. The net loss for the first quarter is estimated to be in the
range of $0.40 to $0.47 per diluted share versus a loss of $0.23 per
diluted share in the prior-year quarter. First-quarter net sales and
earnings will be impacted by lower snowmobile production and a shift
in ATV shipments to future quarters to better align with market
demand.
Conference Call
Arctic Cat will host a conference call today to discuss the
fourth-quarter and full-year results at 10:30 a.m. CT (11:30 a.m. ET).
To listen to the live Webcast or replay of this call via the Internet,
go to the corporate portion of the company's Web site at
www.arcticcat.com, and click on the conference call icon. A telephone
replay also will be available until 6 p.m. CT on Tuesday, May 22. To
access the telephone replay, dial 800-405-2236 and enter conference
call ID 11089645.
About Arctic Cat
Arctic Cat Inc. designs, engineers, manufactures and markets
all-terrain vehicles (ATVs) and snowmobiles under the Arctic Cat(R)
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 and future 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;
increase in material or production cost which cannot be recouped in
product pricing; changes in the sourcing of 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.
ARCTIC CAT INC.
Financial Highlights
(000s omitted, except per share amounts) (Unaudited)
Three Months Ended Year Ended
March 31, March 31,
---------------------------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Net Sales $172,574 $153,299 $782,431 $732,794
Cost of Goods Sold 146,449 130,223 640,637 596,284
--------- --------- --------- ---------
Gross Profit 26,125 23,076 141,794 136,510
Selling, General and
Administrative Expenses 28,327 25,263 109,861 103,775
--------- --------- --------- ---------
Operating Profit (Loss) (2,202) (2,187) 31,933 32,735
Other Income (Expense)
Interest Income 523 582 1,139 1,556
Interest Expense - - (1,026) (105)
--------- --------- --------- ---------
523 582 113 1,451
--------- --------- --------- ---------
Earnings (Loss) Before Income
Taxes (1,679) (1,605) 32,046 34,186
Income Taxes (Benefit) (124) (1,013) 9,976 10,440
--------- --------- --------- ---------
Net Earnings (Loss) $(1,555) $(592) $22,070 $23,746
========= ========= ========= =========
Net Earnings (Loss) Per Share
Basic $(0.08) $(0.03) $1.16 $1.21
========= ========= ========= =========
Diluted $(0.08) $(0.03) $1.15 $1.20
========= ========= ========= =========
Weighted Average Shares
Outstanding:
Basic 18,361 19,405 19,030 19,642
========= ========= ========= =========
Diluted 18,361 19,405 19,128 19,828
========= ========= ========= =========
March 31,
-----------------------
Selected Balance Sheet Data: 2007 2006
---------------------------------------------- ----------- -----------
Cash and Short-term Investments $75,277 $69,893
Accounts Receivable, net 40,428 42,295
Inventories 98,524 92,289
Total Assets 326,204 311,236
Current Liabilities 122,197 110,402
Long-term Debt 0 0
Shareholders' Equity 192,221 189,365
Three Months Ended Year Ended
March 31, March 31,
Product Line
Data: 2007 2006 Change 2007 2006 Change
----------------------------------------------------------------------
All-terrain
Vehicles $145,750 $126,798 15% $431,548 $394,873 9%
Snowmobiles (1,820) 140 - 246,974 238,113 4%
Parts, Garments
& Accessories 28,644 26,361 9% 103,909 99,808 4%
-----------------------------------------------------
Total Sales $172,574 $153,299 13% $782,431 $732,794 7%
=====================================================
CONTACT: Arctic Cat Inc.
Timothy C. Delmore, 218-681-9868
Chief Financial Officer
or
Padilla Speer Beardsley Inc.
Shawn Brumbaugh, 612-455-1754
SOURCE: Arctic Cat Inc.