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Nov. 12, 2007 – Arctic Cat’s changes impact quarterly sales

November 12, 2007
Filed under Features

An adjustment in the timing of ATV shipments and a previously announced cutback in snowmobile production resulted in significant reductions in sales and net earnings for Arctic Cat.

The Minnesota manufacturer reported an $80 million decrease in sales for its fiscal second quarter, which ended Sept. 30. That’s a 28 percent drop in second-quarter sales.

Arctic Cat’s net earnings of $13.9 million — a decrease of 30.5 percent — also reflected the company’s efforts to match its production with dealer and consumer demand.

“We continue to adjust our fiscal 2008 production levels to reduce dealer inventory and align it with anticipated consumer demand this year,” Christopher Twomey, Arctic Cat’s CEO, said in a press release.

Twomey also noted the company has made progress on several of its strategic initiatives:

  • plans to sell its South Dakota facility and consolidate those operations into its Thief River Falls plant, a move that will result in future savings of $1 million per year;
  • reorganization of the ATV, snowmobile and PG&A product lines into separate business units in hopes of expanding each segment;
  • relocation of the company’s headquarters, certain executives, general managers and sales and marketing personnel to the Minneapolis area early in 2008.

    The company’s decision to move some of its ATV shipments to future quarters resulted in second-quarter quad sales of $77.5 million vs. $133.8 million the prior year period. For the first six months of its fiscal year, Arctic Cat’s ATV sales hover 29 percent below the year-ago period.

    “Although we’ve adjusted our ATV production schedule to reflect the current market, we continued to see strong interest in several of our innovative, new ATV models,” Twomey said.

    In a conference call, Arctic Cat officials said they still expect a year-end ATV revenue increase, although that could be due to a higher average selling price for their quads rather than an increase in unit sales.

    Snowmobile sales also are off. Arctic Cat’s second-quarter sales of $97 million were down 20 percent below the prior year and for the six-month period are off 24 percent.

    PG&A sales are relatively flat, at 2 percent for the quarter and 3 percent for the first half.

    Arctic Cat expects its third-quarter revenue to be between $170 million-$180 million compared with $228.1 million for the same period last year. psB

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