Arctic Cat Wildcat Side-by-Side helps drive strong quarterly results

Arctic Cat, manufacturer of snowmobiles, ATVs and the Wildcat side-by-side, announced strong results for the first quarter ending June 30, 2013 of their 2013 fiscal year. The following are some of the highlights of the earnings call with analysts with a focus on UTV/side-by-side issues.

• Net sales for the first quarter increased nearly 9% to 120.8 million versus 111.3 million for the same quarter last year. Sales growth was driven by increased sales across all product lines.
• ATV and Side by Side sales increased 5% to 76.3 million versus 73 million
• Key drivers for the sales increase were the Wildcat X high-horsepower sports Side by Side and the Wildcat four seat model, both of which started shipping during the fourth quarter of last fiscal year.
• While retail ATV sales underperformed the overall industry, North American Side by Side retail sales experienced strong growth and gained market share with Wildcat retail sales increasing 47%.
• The new model year 14 lineup which will include some new models that will allow Arctic Cat to enter some new market segments will be announced in a few days.
• Arctic Cat plans to continue to launch new models each quarter of this fiscal year including the Wildcat 50 trail version that was announced last February. (The new models could be ATVs, side-by-sides or snowmobiles)
• Management expects new products to help grow the ATV and Side by Side business between 25 and 29% for the fiscal year.
• Expansion of our Wildcat Side by Side lineup will contribute to increased PG&A sales this fiscal year.
• During the quarter, R&D expenses increased 18% as product development is a focus.
• Management sees potential to grow their share of the recreational off road market and some of the new products being launched will take the company into new market segments.

Learn more:  Seekingalpha.com (earnings call transcript)

Comment:  As evidenced by Arctic Cat’s recent and planned model introductions, the competition in the UTV/side-by-side market continues to heat up. It will be interesting to see what new market segments they will be targeting. Similar to Polaris, they are looking to diversify their product line and segment coverage. Going forward the competition should be good for consumers, lowering costs and/or improving the value for their purchasing dollar with more features and better performance. For manufacturers, it may hurt profit margins and/or put more pressure on them to keep innovating and launching new models.