Arctic Cat recently reported financial results for fiscal year 2017 first quarter which ended June 30, 2016. Management reported sales of $104.9 million and a loss of $0.81 million for the quarter compared to $134.4 million and $1.1 million for the prior year quarter.
The following are highlights from the earnings call related to the utility vehicle market.
- Management reported progress on expanding their dealer network, adding 17 top tier dealers in underrepresented territories during the quarter. The goal is to add 75 top-tier dealers for the FY.
- Dealer inventory was reduced during the quarter
- A new state-of-the-art R&D facility expansion in St. Cloud, Minnesota, which will become home for all new wheeled product development, was finished
- Sales of ATVs and ROVs (side-by-sides) in the 2017 first quarter totaled $43.7 million, down 17.3% compared to prior-year sales of $52.9 million.
- Sales of ROVs including Wildcat were strong while core ATV sales decreased
- Arctic Cat ROV retail sales declined high single digits versus a ROV market up low single digits compared to prior year quarter that had tough comparables. ROV retail picked up towards the end of the quarter driven by new products.
- New models were introduced including the 6-passenger HDX Crew UTV and the entry priced Prowler 500
- Key marketing initiatives include Arctic Cat 360 where virtual reality headsets allow consumers visiting Arctic Cat event displays and dealerships to feel the thrill of riding an Arctic Cat Wildcat side-by-side in a realistic 360-degree world, and Wildcat stadium side-by-side races.
- Management reports a strong rebate and incentive environment. Pricing is competitive unless you have a “hero” product that can sustain a premium price.
- Product mix indicates some shifting to lower priced vehicles
- Guidance for the full fiscal year includes sales of $635 million to $655 million with second half sales driven by new product launches. ATV/ROV sales should be flat to up low single digits.
Learn more: Seekingalpha.com (Earnings call transcript)