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Arctic Cat hopeful for fiscal 2012

September 5, 2011
Filed under Features

First quarter results lead
to improved forecasts

By LIZ HOCHSTEDLER
ASSOCIATE EDITOR

After posting its first quarter results in late July, Arctic Cat raised its expectations and came off hopeful for the 2012 fiscal year. And the company appears poised to reach those forecasts, as its 2012 lineup includes 23 all-new snowmobiles and the much-anticipated sporty Wildcat side-by-side.

With the Prowler HDX still in its first year on the retail floor, it helped boost first-quarter ATV segment sales to $37.9 million — a 36 percent increase over the year-ago quarter. The ATV segment includes side-by-sides, and international sales also contributed to the increase. Retail sales in North America were down 15 percent.

As snowcheck sales poured in, snowmobile sales were also up. Those increased 2 percent to $17.4 million over the year-ago period.

“Overall, we are pleased with our financial performance in the first quarter,” CEO Claude Jordan said in a company conference call.

And more success is expected in the coming year. With 75 percent of the 2012 snowmobile lineup consisting of all-new units, Arctic Cat expects to see a 25-28 percent sales hike in its combined domestic and international markets. Jordan told Powersports Business that he expects the industry overall to see a 5-10 percent hike.
Pent-up demand by buyers, along with the fact that new sleds already created a buzz at the company’s dealer show in March, has Arctic Cat anticipating such a large increase in sales.

“That was my third snow show, and I’ve never seen that much excitement from our snow dealers,” he said.
Also creating a stir since that March dealer show has been the Wildcat UTV that the company revealed at the show. Details were released about it in July. The UTV features 18 inches of travel and 13 inches of ground clearance.

“When you ride it, this is a unit that has tremendous suspension, and you can go through the bumps — two or three bumps — with very little impact on that machine,” Jordan said.

Though by late August, no one in the public or the media had yet to ride the machine, the vehicle has already built some excitement after the release of its specs and its initial public viewing at the company’s 50th anniversary celebration in late July.

“We’ve been probably pleasantly surprised with the feedback, and I’ll say the buzz that has created within the industry. If it was just buzz that we were looking for, obviously we’ve done good. We hope that buzz leads to sales,” Jordan said.

Orders will be taken this fall, and the UTV will be delivered sometime during Arctic Cat’s second half of the year, which runs Oct. 1 through March 31. The company won’t comment on which quarter Wildcat sales will effect first, but it expects a 2-5 percent increase in the ATV segment for the fiscal year.

Overall, Arctic Cat’s net sales increased 18 percent to $74.9 million during the first quarter, and gross margin grew by 210 basis points.

Parts and Accessories followed other departments in success, seeing a 7 percent increase to $19.7 million during the quarter in which Arctic Cat launched its PG&A e-commerce website.

“We are very pleased with Arctic Cat’s double-digit sales gains and improved profitability in the 2012 first quarter. Revenue grew across all product lines, with particularly strong sales of our Prowler side-by-side utility vehicles contributing to the quarter’s results,” Jordan said. “We continued to focus on our strategies to increase sales by offering innovative products featuring first-to-market technologies, and to improve profitability through a continued emphasis on operational excellence and a lower cost structure.”

In addition to a sales increase in the snowmobile segment, the company predicts a larger-than-anticipated net sales increase will come for the fiscal year as a whole. Arctic Cat now anticipates sales to increase 12-14 percent to $520 million to $530 million over fiscal 2011. The company had originally forecasted 2012 sales at $488 million to $502 million.

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