Sales Up, Fiscal Year Outlook Down For Arctic Cat
Arctic Cat Inc. had a strong quarter thanks to surging sales of parts, accessories and snowmobiles, but lowered full-year sales estimates due to added costs.
The off-road vehicle manufacturer, based in Plymouth but maintaining most of its presence in Thief River Falls, reported net earnings of $15.4 million for the second quarter of fiscal 2015, which ended September 30. Net sales rose 10 percent from last year to $262.5 million.
Warranty expenses, executive severance costs and an unfavorable Canadian currency exchange caused the company to lower the full-year sales range to $745 million to $755 million (net earnings of $1.55 to $1.65 per share), down from $775 million to $786 million (net earnings of $2.25 to $2.35 per share).
“Looking ahead, we remain focused on maintaining a robust pipeline of innovative new products and improving the company’s long-term operating efficiency,” CEO Christopher Twomey said in a statement.
A partnership with original equipment manufacturers (OEMs) caused a 17 percent surge in snowmobile sales with continued growth expected. The parts, garments and accessories category rose 15 percent. The company credits the new accessories for their new line of Wildcat all-terrain vehicle (ATV).
Despite gains in those categories, sales slid for Arctic Cat’s ATV and side-by-side line to $69.6 million, down 4 percent. The company is also incurring expenses from a voluntary recall for an ATV component that “may not meet the company’s standards.” No injuries have been traced to the component.
It has been a rocky year for Arctic Cat. In January, the company reported that it missed earnings during its third quarter of fiscal 2014, causing a sharp drop in the stock price. Claude Jordan was fired as CEO in June and replaced with Christopher Twomey, who previously held the position for more than two decades. Earlier this month, a member of the board of directors resigned.
The company recently filed a lawsuit against Bombardier Recreational Products for patent infringement.
Stocks fell sharply yesterday before the quarterly report, but rose modestly above their previous close to $31.65 per share as of midday.