By Marc Cesare, Smallvehicleresource.com
Arctic Cat reported financial results for the fiscal 2017 second quarter ended September 30, 2016. The company reported a loss of $12.8 million on sales of $164.6 million compared to net earnings of $11.2 million and sales of $211.2 million in the prior-year quarter. Management pointed to a softer powersports market, as well as lower sales volume, unfavorable product mix and heightened promotional environment as factors. Sales of ATVs and side-by-sides totaled $44.0 million for the quarter, down 37.8 percent compared to prior-year sales of $70.8 million. Year-to-date sales totaled $87.8 million, down 29 percent from $123.6 million in the prior-year first half.
The following are some highlights from the earnings call related to side-by-sides:
- Weakness in oil, gas and agriculture sectors contributed to softer sales
- ATV and SxS retail sales decreased approximately 4% in the second quarter versus an industry that was down low single-digits. Wholesale sales decreased further as management is trying to reduce dealer inventory levels.
- New products including those designed with Robby Gordon have been released, and a third wave of models this fiscal year will be introduced by late February
- The company has added 28 top-tier dealers to their network but is likely to miss their target of 75 for the fiscal year. Net dealer add is flat.
- For the short term management anticipates continued market softness, competitiveness and foreign currency headwinds
- ATV/SxS sales are expected to be flat to down mid-single digits for the full year but up in the second half driven by new product introductions.
- The company announced two new strategic partnerships for developing products for adjacent markets but cannot release more details, including whether they involve SxSs.
Learn more: Seekingalpha.com (Earnings call transcript)