Arctic Cat FY2014 Q2 Reports Sales Up, Profits Down

MINNEAPOLIS–(BUSINESS WIRE)–Arctic Cat Inc., (NASDAQ: ACAT) today reported net earnings of $23.4 million, or $1.70 per diluted share, for the fiscal second quarter ended September 30, 2013, compared to prior-year net earnings of $25.0 million, or $1.80 per diluted share. Net sales in the quarter were $238.5 million, up from net sales of $229.0 million in the same quarter last year.

“Based on our first-half results and prospects for the balance of this fiscal year, we remain confident that we will achieve another year of increased sales, record earnings and enhanced shareholder value in fiscal 2014”

Commented Claude Jordan, Arctic Cat chairman and chief executive officer: “We had strong double-digit sales gains in side-by-sides and snowmobiles that led to record second-quarter sales, on top of a record prior-year period. However, ATV sales in North America and Europe fell short of our expectations in the quarter, and the lower volume reduced our profitability.”

Jordan added: “We are maintaining our full-year outlook for fiscal 2014, but expect a challenging second half of the year. Arctic Cat posted outstanding performance in the fiscal first quarter, which is reflected in first-half sales growth of 6 percent and earnings up 7 percent. We anticipate continued strong dealer demand for side-by-sides and snowmobiles, and the new Wildcat models that we expect to introduce in our fiscal second half. In addition, we continue to focus on operational excellence and cost controls that will enhance our efficiency and profitability.”

Arctic Cat plans to introduce two new Wildcat pure-sport side-by-sides in November, as well as the Wildcat 50 Trail model in the fiscal 2014 fourth quarter.

Arctic Cat’s fiscal 2014 second-quarter financial results compared with the prior-year quarter:

Net sales grew approximately 4 percent, led by contributions from the Wildcat and Prowler HDX side-by-sides, and snowmobiles.

North American retail sales increased 17 percent from the prior-year quarter, with retail sales gains in ATVs, side-by-sides and snowmobiles.

Gross profit margins were 25.9 percent compared to 28.0 percent in the prior-year quarter, due to product mix, Canadian currency impact, and increased sales incentives driven by double-digit retail sales increases in the ATV/side-by-side business. Including the lower-margin Yamaha sleds that Arctic Cat is supplying, combined with the Canadian currency impact, Arctic Cat expects fiscal 2014 gross margins to be approximately 80 basis points lower than the prior year.

Operating expenses rose slightly to $25.4 million versus $25.3 million. The company continued to increase investment in research and development, which was up 29 percent from the prior-year quarter, to ensure a strong pipeline of new products and technologies, while maintaining strict cost controls.

Operating profit was $36.3 million versus $38.8 million in the year-ago quarter.
Cash and short-term investments totaled $40.1 million, up $16.1 million versus the same quarter last year. The company had no debt.

For the six months ended September 30, 2013, Arctic Cat’s net earnings rose 7 percent to a record $28.8 million, or $2.10 per diluted share, compared to net earnings of $27.0 million, or $1.95 per diluted share, in the prior-year quarter. The company’s year-to-date net sales increased 6 percent to $359.3 million versus net sales of $340.3 million in the year-ago first six months.

Business Line Results

ATVs/Side-by-Sides – Sales of Arctic Cat’s all-terrain vehicles (ATVs) and side-by-sides increased 4 percent to $72.7 million, up from $69.7 million in the same period last year, primarily due to strong orders for the Wildcat X and the four-seat Wildcat 4 pure sport side-by-sides.

Said Jordan: “Our side-by-side business performed well in the 2014 second quarter, with continued strong growth in our Wildcat and Prowler HDX models in North America and international markets outside of Europe. However, second-quarter sales of ATVs in North America were lower than we anticipated, combined with ongoing economic headwinds in Europe, both of which contributed to single-digit increases in our ATV and side-by-side sales to dealers. On the retail side, we saw strong double-digit sales gains for our ATV and side-by-side business in the fiscal 2014 second quarter, due to consumer demand for our new products. As a result of lower wholesale and higher retail sales, our ATV dealers now have an improved inventory position that should translate into increased dealer orders going forward. Additionally, with the new side-by-side models that we intend to launch in our fiscal third and fourth quarters, we anticipate solid performance in the second half of the fiscal year.”

Arctic Cat remains focused on further increasing its ATV/side-by-side business as a percent of total sales. The company anticipates that this business will exceed 50 percent of total company sales for the fiscal 2014 full year. During fiscal year 2013, 45 percent of sales were in the ATV/side-by-side segment, up from 39 percent the previous year. The company continues to advance its growth strategy through new product introductions and international expansion.

Since entering the sport side-by-side segment with the Wildcat only a year and a half ago, Arctic Cat has rapidly extended its Wildcat line and now offers: Base and Limited models; the four-seat Wildcat 4; and the high-horsepower Wildcat X and Wildcat 4X. Further, the company has announced that it plans to begin shipping a 50-inch wide, trail-legal Wildcat in late fiscal 2014. With a narrower stance, the 50-inch Wildcat will allow riders access to authorized ATV trails, making it a versatile option for consumers.

Snowmobiles – Snowmobile sales in the fiscal 2014 second quarter increased 5 percent to $135.4 million, up from $128.6 million in the prior-year quarter.

Commented Jordan: “We are pleased with consumers’ early season retail response to our 2014 model year snowmobile line-up. In addition, our expanded relationship with Yamaha continues to proceed smoothly. We expect to begin shipping a larger number of snowmobiles to Yamaha in our 2014 fiscal third quarter.”

For the 2014 model year, Arctic Cat launched 10 snowmobiles, including the all-new ZR 6000 El Tigre high-performance sled, and new snowmobile engine options from Arctic Cat and Yamaha through an engine supply agreement. Arctic Cat also introduced its first designed and built snowmobile engine, the 6000 C-TEC2, which is a powerful, lightweight and fuel-efficient 2-stroke that enables the company to enter the large 600cc snowmobile market segment that now accounts for 18 percent of the snowmobile industry.

Parts, Garments & Accessories – Sales of parts, garments and accessories (PG&A) in the fiscal 2014 second quarter totaled $30.4 million, down 1 percent compared to $30.8 million in the prior-year quarter. Strong growth in parts and accessories was offset by lower garment sales. Arctic Cat expects its PG&A business to grow in the remainder of fiscal 2014 through further expansion of its Wildcat accessories offerings.

Fiscal 2014 Full-Year Outlook

For the fiscal year ending March 31, 2014, Arctic Cat is maintaining its sales and earnings guidance, but is targeting the lower end of the guidance range. The company continues to expect earnings in the range of $3.27 to $3.37 per diluted share, an increase of 13 percent to 17 percent over prior-year earnings of $2.89 per diluted share. The company anticipates sales in the range of $754 million to $768 million, an increase of approximately 12 percent to 14 percent versus fiscal 2013.

Arctic Cat’s fiscal 2014 outlook includes the following assumptions versus the prior fiscal year: core ATV North American industry retail sales flat to up 5 percent; side-by-side North American industry retail sales up 15 percent to 25 percent; snowmobile North American industry retail sales flat to up 3 percent; Arctic Cat dealer inventories, excluding new products, flat to up 10 percent; achieving slightly lower operating expense levels as a percent of sales; and increasing cash flow from operations. The company expects gross margins to decrease by approximately 80 basis points, due to additional Yamaha snowmobiles that will be built in Arctic Cat’s factory and, to a lesser extent, the Canadian currency impact. Most of the Yamaha gross margin impact will be experienced in the fiscal 2014 third quarter, as Arctic Cat ships a large number of Yamaha snowmobiles.

“Based on our first-half results and prospects for the balance of this fiscal year, we remain confident that we will achieve another year of increased sales, record earnings and enhanced shareholder value in fiscal 2014,” said Jordan. “We continue to expect our growth to be fueled by a strong pipeline of innovative new products and technologies, further market share gains in the growing side-by-side segment and greater operating efficiencies.”

BRP Inc. Announces Closing Of Secondary Offering Of Its Subordinate Voting Shares

Valcourt, Québec, October 9, 2013 – BRP Inc. (“BRP” or the “Company”) announced today the closing of the previously announced bought deal secondary offering pursuant to which Bain Capital Luxembourg Investments S.à r.l. (“Bain”), Caisse de dépôt et placement du Québec (“CDPQ”) and other selling shareholders (collectively, the “Selling Shareholders”) sold an aggregate of 8,000,000 subordinate voting shares of BRP (“Subordinate Voting Shares”) at a price of $27.85 per Subordinate Voting Share for aggregate gross proceeds of approximately $223 million to the Selling Shareholders. 5,986,735 of the Subordinate Voting Shares were sold by Bain, 1,279,097 of the Subordinate Voting Shares were sold by CDPQ and 734,168 of the Subordinate Voting Shares were sold by the other selling shareholders. The Company did not receive any of the proceeds from this offering.

Following this offering, Beaudier Inc. and 4338618 Canada Inc., Bain and CDPQ hold 41,237,476, 40,145,521 and 7,640,347 multiple voting shares of BRP (“Multiple Voting Shares” and, collectively with the Subordinate Voting Shares, the “Shares”), respectively, representing approximately 34.9%, 34.0% and 6.5%, respectively, of the Company’s issued and outstanding Shares and approximately 43.9%, 42.8% and 8.1%, respectively, of the voting power attached to all outstanding Shares.

The Subordinate Voting Shares were offered by an underwriting syndicate led by BMO Nesbitt Burns Inc., RBC Dominion Securities Inc., UBS Securities Canada Inc. and Citigroup Global Markets Canada Inc., acting as joint bookrunners, and including CIBC World Markets Inc., Desjardins Securities Inc., Scotia Capital Inc., National Bank Financial Inc. and Robert W. Baird & Co.

First Yamaha Vipers Roll Off The Line In TRF

More than two years of engineering, development, manufacturing and logistics work came to fruition in Thief River Falls, Minnesota, as the very first Yamaha SR Viper RTX SE units rolled off the assembly line at the Arctic Cat factory. The milestone was marked by a ribbon-cutting ceremony with executives from both companies and witnessed by the factory employees responsible for building the units.

“Our alliance is a show of great cooperation between our companies and this, I believe, is the biggest news to hit our business in decades,” said Yamaha Motor Corporation, USA president, Toshizumi Kato. “On behalf of Yamaha Motor Japan I would like to congratulate everyone on this major accomplishment of what we see here today. Thank you to the factory workers of Arctic Cat, you should be very proud of the work you have done.”

The all-new SR Viper models are the result of an industry-first in the modern era: Yamaha is in a supplier agreement with Arctic Cat to leverage their respective strengths. Yamaha is undisputed in the snowmobile world for its leadership position in high performance 4-stroke engines. Arctic Cat is known for lightweight chassis and suspension design.

“Together we have made a snowmobile which has the best of both our snowmobiles’ DNA,” continued Kato in his remarks. “I look forward to a future of mutual and beneficial growth for both Arctic Cat and Yamaha. Today let’s celebrate our accomplishment so far, for tomorrow the opportunities are endless.”

Cat Adds Malfitano As VP, North American Sales

Matt Malfitano

Plymouth, Minn. (Sept. 10, 2013) – Arctic Cat is happy to announce that Matt Malfitano is joining Arctic Cat as Vice President of North American Sales. Matt will be responsible for leading Arctic Cat’s sales, national accounts and dealer development efforts in the United States and Canada.
Matt brings extensive experience leading dealer-based sales organizations, in both start- ups and in more mature market segments. His keen business acumen will make him a tremendous addition to the management team.

Most recently, Matt served as Director of Global Sales and Operations for Fisker Automotive, a luxury hybrid electric vehicle manufacturer. Prior to that, Matt served as Vice President of Sales Operations for Maserati/Alfa Romeo North America and as Senior Director of Global Sales and Marketing with Eclipse Aviation.

Earlier in his career, Matt worked for Ford Motor Company’s Volvo Division as Vice President of Sales for the Western Region. He also held progressively responsible positions within Volvo in sales, marketing, retail operations and after sales support.

Matt is an avid outdoor enthusiast. He graduated from Lynn University with a Bachelor of Science degree in Business Administration. He will relocate to the Minneapolis area from California in the coming months.

BRP Produces Its 3 Millionth Ski-Doo Snowmobile

Valcourt, Québec, August 30, 2013 – BRP produced yesterday its three millionth Ski-Doo snowmobile, the 2014 Ski-Doo Summit X E-TEC 800R model, in its Valcourt, Québec manufacturing facility, 54 years after the Ski-Doo snowmobile was born in 1959.

“From design to engineering, to the assembly line via marketing, sales and many more, BRP employees have made this milestone possible by striving for quality, innovative and industry- leading products that continually reinvent the sport,” said José Boisjoli, president and CEO. “I want to thank all of them for their hard work, commitment and dedication over the years, without them, this accomplishment would not have been possible.”

It has been exactly 40 years, day for day, since the millionth snowmobile, a 1974 Ski-Doo T’NT Everest 440 model was produced, and 20 years since the second millionth, a 1994 Ski-Doo Summit snowmobile.
“All our employees, but particularly the ones in Gunskirchen, Austria and Valcourt, Canada, have made us the world leader on snow,” said Gerd Ohrnberger, vice-president and general manager, Product Engineering and Manufacturing Operations division. ”They are the best in the world at designing and manufacturing engines and vehicles.”

The 3,000,000th Ski-Doo snowmobile was originally destined for the European market. It will instead join the millionth and two millionth Ski-Doo sleds at the J. Armand Bombardier Museum in Valcourt.
Coincidentally, the 2 and 3 millionth snowmobiles are both Summit models. The original Ski-Doo Summit snowmobile was the first OEM sled designed specifically for the unique character of mountain snowmobiling. In the model’s 20th anniversary year, BRP is still leading the mountain snowmobile segment with the most specialized sled in the market.

Yellowstone Winter Use Plan In The Books

CHEYENNE, WYO. — The National Park Service adopted a winter use plan for Yellowstone National Park on Thursday that focuses more on controlling the effects of snowmobiles rather than strictly limiting their numbers.

Previous winter use plans capped the numbers of snowmobiles and enclosed, multi-passenger snowcoaches allowed in the park each day. That policy will continue for the upcoming winter season, with no more than 318 snowmobiles and 78 snowcoaches allowed in each day.

Read the rest here.

Polaris Names Tim Larson VP, Global Customer Excellence

Minneapolis (August 19, 2013) – Polaris Industries Inc. (NYSE: PII) today announced the hire of Tim Larson to the newly created position of Vice President, Global Customer Excellence. He will begin work with the Company in this role immediately.

“Striving for customer excellence in all that we do is vital to Polaris’ efforts to continue growing and leading our markets, and we are excited to have Tim joining us to spearhead this effort,” said Polaris Chairman and CEO Scott Wine. “For nearly 60 years we have developed world-class products. To drive continued growth, we must take this solid foundation to the next level by creating a unique and identifiable world-class customer experience. Tim brings an extensive professional background perfectly suited to the demands of this new role.”

With the growth of digital technology, the retail environment is more dynamic than ever before. Leading companies must stay ahead of customers’ rapidly changing expectations. For Polaris, this means delivering excellence at each customer touch point, across its current global dealer network, business units, channels and technology, as well as evaluating strategic expansion of distribution channels and customer base. To address that need, Polaris created this new leadership position directly accountable for those intersections to deliver a truly differentiated customer experience. Larson will have overall responsibility for creating that experience, working collaboratively across the organization and network.

Larson brings more than 20 years of experience developing customer-centric industry leaders in consumer product, manufacturing, technology and multi-channel businesses. For the past five years Tim served as President and Chief Executive Officer at Jostens, Inc. His strong background in general management, sales, marketing, digital campaigns and developing multi-channel capabilities closely aligns with this new role.

Polaris has a strong existing foundation, one from which the Company intends to grow through collaboration between Larson, Polaris dealers and leaders from across the organization, including North American and International sales, service, business units, digital channels. Ultimately, this team will develop a comprehensive win-win strategy for Polaris to become a customer-centric, global enterprise. This effort will initially focus on North America, but will grow to encompass Polaris’ entire global footprint.

FOX Rings NASDAQ Opening Bell, LaVallee Jumps Over It

Photo: NASDAQ

FOX Factory Holding Corp. [FOXF] visited the NASDAQ MarketSite in Times Square in celebration of its initial public offering on August 8, on The NASDAQ Stock Market.

In honor of the occasion, Larry L. Enterline, CEO ringed the Opening Bell. Levi LaVallee launched his snowmobile over head during the ringing.

Headquartered in Scotts Valley, Calif., FOX’s main manufacturing operations are in Watsonville, Calif., its off-road division and manufacturing are in Santee, Calif., and its Midwest Service Center is in Baxter, Minn. FOX distributes its products in more than 40 countries.

The NASDAQ OMX Group, Inc. is the world’s largest exchange company.

Photo: NASDAQ

FOX Goes Public

Fox (officially known in business circles as Fox Factory Holding Corp.) went public today on the NASDAQ exchange under the symbol FOXF. FOX CEO Larry L Enterline rang the opening bell and Levi LaVallee is scheduled to jump a snowmobile in Times Square to mark the occasion. Stay tuned, because it didn’t happen without photos.

Read more here.

And here.

Arctic Cat FY2014 Q1 Results

Net sales increased approximately 9 percent to record $120.8 million on higher sales across all product lines;Net earnings up 172 percent to $5.5 million from $2.0 million;Diluted EPS up 186 percent to record first quarter $0.40 versus $0.14 in prior-year. Read the rest here.