Arctic Cat’s Stock Dives On Missed Earnings
Arctic Cat’s stock price fell about 15 percent Thursday after the company announced that its third-quarter profits were well-below analysts’ expectations.
The Thief River Falls-based recreational vehicle company announced that net earnings for the third quarter, which ended December 31, totaled $12.1 million, or $0.89 per share, down 32 percent from $17.9 million, or $1.30 per share, during the same period in 2012. Earnings per share were $0.43 lower than what analysts polled by Thomson Reuters had expected.
Revenue, meanwhile, totaled $225.8 million, up 3.6 percent from $218 million in the third quarter of 2012. Third-quarter revenue fell short of analysts’ projections of $241.6 million.
“As we stated last quarter, we expected the second half of our fiscal year to be challenging,” Chairman and CEO Claude Jordan said in a statement. “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.”
Arctic Cat said it’s now lowering its sales and earning guidance for 2014 from a range of $3.27 to $3.37 per share to a range of $2.90 to $3.00 per share.
On a positive note, Arctic Cat said its North American retail sales increased by 15 percent on strong gains in ATVs, Wildcat “side-by-sides,” and snowmobiles.
“Our side-by-side business again performed well in the 2014 third quarter, with strong contributions from Wildcat sales,” Jordan said. “Including the new Wildcat Trail side-by-side model that we just launched, Arctic Cat now offers 10 different Wildcat models. We anticipate continued strong performance in our side-by-side business during the fourth quarter of this fiscal year, led by sales of the new Wildcat Trail.”
The company said it began shipping some of its new Wildcat Trail models in December but most of its orders will be filled in the fourth quarter. The new model features a narrower 50-inch-wide platform, which Arctic Cat said makes it an attractive and versatile option for consumers.
Medina-based competitor Polaris is also in the process of debuting a new off-road vehicle, called the Sportsman Ace. According to Polaris, its new vehicle combines the size (a 48-inch-wide platform) and handling of its ATVs with the comfort of its side-by-sides—click here to read more.
Arctic Cat said its ATV and side-by-side business is quickly becoming a larger percentage of its total sales. Arctic Cat anticipates that the business will encompass about 50 percent of its total sales in 2014, up from 45 percent in 2013 and 39 percent in 2012.
Thursday wasn’t the only time in recent months that Arctic Cat’s stock has taken a hit. It is now down more than 20 percent from three months ago. It was trading at $46.30 per share Thursday afternoon.