Arctic Cat Inc., reported net earnings of $12.1 million, or $0.89 per diluted share, for the fiscal third quarter ended December 31, 2013, compared to prior-year record net earnings of $17.9 million, or $1.30 per diluted share. Net sales in the third quarter were $225.8 million, up from net sales of $218.0 million in the same quarter last year.
-Net sales rose to $225.8 million compared to $218.0 million in prior-year quarter;
-Double-digit sales gains in ATV/Side-by-Side and PG&A businesses;
-EPS of $0.89 in third quarter versus record $1.30 in prior-year quarter;
-Company lowers full-year sales and earnings outlook for fiscal 2014
Commented Claude Jordan, Arctic Cat chairman and chief executive officer, “The company posted solid revenue growth in the third quarter that met our expectations, as we achieved double-digit sales gains in our ATV/Side-by-Side and our Parts, Garments and Accessories businesses. As we stated last quarter, however, we expected the second half of our fiscal year to be challenging.
"Profitability in the 2014 third quarter was reduced, chiefly due to anticipated lower gross margins on snowmobile models built for Yamaha, as part of our new partnership this year, and ATV product mix. The Yamaha gross margin impact was primarily absorbed in the fiscal 2014 third quarter compared to record earnings in the prior-year third quarter.”
Jordan added, “We are expecting strong fourth-quarter sales and earnings, which will be driven by the launch of our new Wildcat™ Trail model. Additionally, we continue to focus on operational excellence and cost controls to maximize our efficiency and profitability.”
Highlights of Arctic Cat’s fiscal 2014 third-quarter and year-to-date financial results compared with the prior-year periods:
Net sales grew approximately 4 percent for the quarter, primarily led by contributions from the new Wildcat X and Wildcat X Limited side-by-sides, and parts, garments and accessories.
North American retail sales increased 15 percent from the prior-year quarter, with double digit retail sales gains in ATVs, Wildcat side-by-sides and snowmobiles. Year to date, these retail gains have allowed Arctic Cat’s ATV business to gain market share for the 2014 fiscal year and its snowmobile business to gain the most market share in the industry for the 2014 fiscal year.
Gross profit margins were 17.8 percent compared to 23.3 percent in the prior-year quarter due to several factors, most notably lower-margin Yamaha snowmobiles supplied in the quarter and product mix. Previously, Arctic Cat expected 2014 full-year gross margins to be lower by 80 basis points. The company now anticipates that fiscal 2014 gross margins will be approximately 190 basis points lower than the prior year, primarily due to product mix and Canadian currency impact.