Arctic Cat Reports Quarterly Earnings For Q1 FY2016

The 2015 Wildcat Sport XT, a recent addition to the Arctic Cat side-by-side lineup.

Models like the 2015 Wildcat Sport XT help make the side-by-side business a bright spot for Arctic Cat.

Last week Arctic Cat reported earnings for the first quarter of their 2016 fiscal year with the company losing $1.1 million on sales of $134 million. The following is a summary of the highlights from the earnings call with a focus on side-by-sides.

  • Sales of Wildcat recreational vehicles helped drive recreational off-highway vehicle (ROV) sales.
  • Sales of ATVs and ROV side-by-sides decreased 17% to $52.9 million from $63.8 million in the year ago quarter. Retail sales increased significantly but shipments to dealers decreased in order to substantially reduce dealer inventory.
  • Management believes side-by-side retail sales outpaced the industry in North America.
  • ATV sales were down as the management continued to reduce ATV dealer inventory. Inventory was reduced by approximately 4,000 units.
  • Plant investment in a new paint line and automated assembly started in the quarter
  • Management has set goals of improving and expanding the Arctic Cat dealer network, emphasizing end-user focused product development, making strategic acquisitions and partnerships and creating a brand marketing powerhouse.
  • Management estimates that ATV-ROV retail sales for the quarter were up high teens.
  • For the fiscal year ending March 31, 2016, Arctic Cat estimates full-year net sales in the range of $690 million to $705 million with ATVs and side-by-side sales to rise 9% to 12%.

Learn more:  Seekingalpha.com (Earnings call transcript)

Comment:  The relatively new management team appears to be on plan in executing their turnaround of the ATV business while investing in initiatives for future growth.  The side-by-side business continues to be strong. How well they can continue to execute on dealer network relationships and expansion will be a key to continued success.

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