Aug. 11, 2008 – Sales up, but Arctic Cat finishes Q1 with net loss

A change in shipment timing helped Arctic Cat boost its fiscal year first-quarter sales, although the Minnesota manufacturer still ended the period in the red.
Arctic Cat reported a net loss of $7 million for its 2009 fiscal year first quarter, a slight improvement over last year’s $7.2 million loss.
The company’s overall sales rose 7 percent to $93.9 million as a change in shipments helped boost snowmobile revenue considerably. Sled sales totaled more than $21.4 million, an 80 percent improvement over the year-ago period. However, Arctic Cat’s largest sector, its ATV division, was down 10 percent to $53.8 million.
In a conference call, Arctic Cat CEO Christopher Twomey said the company’s core ATV sales were down a little less than the industry as a whole. First-half retail sales fell more than 23 percent in the United States. Twomey, however, did say dealer inventory levels in North America are at or below last year’s levels. He also said the company’s UTV retail sales are up over the year-ago period, although the percentage growth increase is not maintaining the level of past years.
Arctic Cat believes its fiscal year ATV revenues will be flat to a year ago. However, the company believes some of the high-displacement segments of the market provide potential growth areas.
“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,” Twomey said in a press release.
PG&A was also a growth area, with the company reporting a 15-percent boost in first-quarter revenue. “We are optimistic that we will continue to grow PG&A sales, with additional focus and attention under our new leadership for this business,” Twomey said.
Twomey also said he expects Arctic Cat “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.”
The company expects its fiscal-year sales to increase 5-8 percent from the year-ago period as Twomey said orders from the company’s recent national dealer meetings met expectations. psb