ATV DIGEST
ARCTIC CAT REPORTS RECORD 2Q SALES
Arctic Cat Inc., Thief River Falls, Minn., reported record net sales of $240.7 million for the second quarter ended Sept. 30, 2004, up from $237.7 million in the same quarter last year. Earnings declined, however, to $19.7 million, or 94 cents per diluted share, down from $21.6 million, or 98 cents per diluted share, in the same quarter last year. Arctic said the earnings decline was caused by a one-week transportation delay in shipping its higher margin snowmobiles at the end of the quarter. Those sales were recorded in the third quarter instead of the second quarter, it said.
For the six-month period, the company reported earnings of $19.8 million, or 94 cents per diluted share, on sales of $343.3 million, down from $21.7 million, or 98 cents per diluted share, in the first six months last year. Six-month revenues last year were $314.8 million.
At the same time, Arctic said it has reached an agreement with its Alaska distributor that will enable it to sell directly to dealers there. The move is expected to expand Cat’s sales there and improve its gross margins, the company said. The company also reported that it had repurchased 250,000 shares of its common stock during the quarter.
ATV sales increased 10% in the second quarter and year-to-date sales for the six months were up 14% compared to the same period last year. Snowmobile sales decreased 5% during the quarter due to the shipping timing, but sales for the six months were up 7%.
BRP REPORTS 2Q EARNINGS INCREASE
Bombardier Recreational Products Inc. (BRP), Valcourt, Quebec, reported net income for the second quarter ended July 31, 2004, of $18.7 million, up from $2.8 million in the same quarter last year. Revenues increased by 15.6% to $572.6 million from $495.5 million in the second quarter last year. All reported figures are in Canadian dollars. For the six months, revenues increased by 19.2% from $1,003.4 million to $1,195.6 million. For the six-month period, BRP reported a net loss of $17 million compared to $13.7 million last year.
BRP’s income from continuing operations for the second quarter of 2005 was $20.8 million compared to an income from continuing operations of $3.6 million for the same period last year. Year-to-date loss from continuing operations amounted to $13.7 million compared to $11.1 million for the same period in 2004.
The sale of the Utility Vehicles segment to Camoplast Inc. had minimal impact on the results of operations and financial position of BRP for the second quarter this year, the company said, since the Utility Vehicles segment represented only 3.3% of combined revenues at the end of 2004. The net proceeds of from the sale of the Utility Vehicles segment will be received in the third quarter of fiscal 2005.
Second quarter results were driven by increased sales of snowmobiles, watercraft and ATVs as well as a better product mix. These gains more than offset the negative impact related to the strengthening of the Canadian dollar in relation to the U.S. dollar, the company said, and they total approximately $12 million in the second quarter this year and $38 million year-to-date.
Consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $84.5 million for the six months ended July 31, 2004, compared to $35.4 million for the corresponding period last year. This improvement results mainly from the impact of additional revenues and increased gross profit when adjusted for impacts resulting from purchase accounting.
“The popularity of our ATV products, our agreement with John Deere, the increased deliveries of snowmobiles, our decision to better align watercraft production with the retail business cycle and the growth of our international sales all contributed to the increased sales and volumes of the quarter,” said Jose Boisjoli, BRP’s president and CEO.
BRP now operates in two segments: the Power Sports segment designs, develops, manufactures and sells snowmobiles, watercraft, ATVs, sport boats and Rotax engines; the Marine Engines segment designs, develops, manufactures and sells outboard engines.
Power Sports segment revenues for the second quarter of 2005 reached $417.7 million compared to $354.3 million for the same quarter of FY04, an increase of 17.9%. Year-to-date revenues increased by $163.9 million to $901.1 million, an increase of 22.2% over the same period the previous year.
HONDA REPORTS RECORD EARNINGS
Honda Motor Co. reported that its consolidated net profit for the six months ended Sept. 30, 2004, inched up 0.9% from the same period last year to a record high of $2.174 billion, aided by strong sales of motorcycles and automobiles. Sales of motorcycles climbed 25.2% to 5.28 million units while those of automobiles rose 8.5%to 1.57 million units. North American motorcycle unit sales climbed to 278,000 units from 239,000 units in the same period last year, Honda said. Overall sales grew 3.5% to a record $37.521 billion, it said.
A good showing in the auto and motorcycle divisions more than offset exchange losses from the yen’s appreciation against the dollar, and increased sales and management costs, the company said.
KAWASAKI CUTS CONTINGENCY
Kawasaki cut its ATV race contingency program in the Grand National Cross Country series. The program paid racers in certain classes for winning aboard a Green machine. Kawasaki claims the cut will allow it to serve a broader area of motorcycle and ATV endeavors, as well as offer increased dealer support with an increase in traditional print and television advertising programs.
“We have been doing what others have not since ’99,” said Russel Brenan, media supervisor for Kawasaki. “For five years Kawasaki has gone to extensive lengths to lend support to the ATV industry, specifically the GNCC ATV race scene. In comparison to the competition, I would like to think we’ve helped the sport of ATV racing in many positive ways. Upper management did away with these programs for now. Kawasaki will reexamine ATV race support as new models are released. We’re definitely not writing off ATV race support in the future.”
In addition, Kawasaki’s motorcycle drag racing support will also be terminated.
ATVA ANNOUNCES 2005 ATVA/ITP GNC MX SCHEDULE
The ATVA/ITP Grand National Championship Motocross series is schedule is done and two new tracks are included in the circuit. Since the series remains 12 races long, two long-time tracks have been omitted. The two new tracks are Lake Whitney, Texas, and Unadilla, New York, while Casey, Ill., and Southwick, Mass., have been cut.
The ATVA will be celebrating the 20th Anniversary of Grand National Championship racing in 2005.
2005 ATVA/ITP, GNC-MX Schedule
Feb. 5-6: Glen Helen, Calif.
Feb 26-27: Lake Whitney, Tx.
March 12-13: Gatorback, Fla.
April 2-3: Echeconnee, Ga.
April 16-17: Birch Creek, Va.
April 30-May 1: Budds Creek, Md.
May 14-15: Red Bud, Mich.
May 28-29: Muddy Creek, Tenn.
June 18-19: High Point, Pa.
July 2-3: Daniel Boone, Ky.
July 30-31: Unadilla, N.Y.
Aug 13-14: Hurricane Mills, Tenn.
GNCC RACE SCHEDULE REVISED
The 13-round Grand National Cross Country Series 2005 schedule has been revised. Due to weather concerns, the previously announced November 5-6 date has been replaced by a September 10-11.
“After dealing with mud and a lack of daylight at our traditional final race date in October, we decided that racing in November in Indiana is just too big a risk,” said GNCC Trail Boss Jeff Russell. “We don’t want the racers to be stuck in the cold, the snow, or worse, in the dark, by holding a race so late next fall.”
Racer Productions, producer of the series, will announce the race locations for each of the dates shortly. For the latest information, log onto GNCCRacing.com.
ATV SALES UP IN GERMANY
Germany’s IVM says ATV sales in the first half of 2004 reached 14,800 units compared to the 16,135 units registered during full-year 2003. The group says sales for market leader Standard Motor Co. eclipse those of Taiwan’s Kymco and Japan’s Yamaha Motor Co. ATVs can be made street-legal in Germany. The majority of quad sales are for units ranging from 125cc to 350cc.
Michael Stein is marketing manager for ACE Trade AG, the European importer of Arctic Cat product. Stein says increased ATV sales are forcing the company to expand for the third time in three years.
“We started operations in an 800 sq. meter facility, then expanded to a 2,800 sq. meter space, and now we’re in the process of expanding to 5,000 sq. meters,” Stein told Powersports Business. “Sales have been quite good.”
Another Minnesota-based ATV manufacturer also reports success overseas. “As we have seen for several quarters now, our overseas international operations continue to show very strong growth,” Polaris CEO Tom Tiller said recently.
HER CHEE EXPANDS IN TAIWAN
Her Chee Industrial Co., Ltd., maker of Adly-brand powered two-wheelers ATVs and a supplier to Bombardier and Arctic Cat, plans to set up a new ATV production and R&D center in Taiwan.
Her Chee chairman C. C. Chen said that the new ATV center is scheduled to begin mass production in early 2006, when Her Chee’s annual profit is expected to reach $26.55 million on revenues of $147.49 million.
Her Chee plans to construct the new ATV center on a 180,000 sq. ft. plot. A three-floor office/plant building will be built, where the first floor will accommodate ATV production lines, the second an R&D center concentrating on the development of 500cc to 800cc ATVs, and the third floor offices and an employee dormitory.
Chen said contract production business with BRP and Arctic Cat and sales in Europe further warrant the expansion. According to Chen, exports to the Europe and the U.S. currently account for 50% and 35%, respectively, of Her Chee’s revenue.
