Issue link: http://read.dmtmag.com/i/687402
FINANCIAL First three months of year brings inventory decrease Arctic Cat (NASDAQ:ACAT) reported a net loss of $16.9 million, or $1.30 per share, on net sales of $121.4 million for the fiscal 2016 fourth quarter ended March 31, 2016. In the prior- year quarter, Arctic Cat reported a net loss of $21.5 million, or $1.66 per share, on net sales of $98.9 million. Christopher Metz, Arctic Cat's president and chief executive officer, stated: "Our fourth- quarter sales rose versus the prior-year quarter, but fell short of our expectations. A stron- ger fourth-quarter turn- around was hampered by lack of snowfall that constrained snow-related sales, ongoing foreign currency headwinds and a softening powersports market. A competitive retail environment also led to higher spending than planned on promo- tional programs, particularly in ATVs and ROVs, which reduced earnings in the quarter." The company's key strategies to reinvigo- rate growth include: dramatically improving Arctic Cat's dealer network, ramping up end- user focused new products, pursuing strategic partnerships and creating a brand marketing powerhouse. Commenting further, Metz said: "In the fourth quarter, the company continued to execute well on our strategies. We further strengthened and expanded our dealer base. We activated sales through important market- ing sponsorships and our new event market- ing team. And we continued to maintain tight inventory control to allow a return to greater wholesale and retail growth of new products in fiscal 2017." Arctic Cat's fiscal 2016 fourth-quarter net sales of $121.4 million rose 22.7 percent com- pared to prior-year sales of $98.9 million. Unfa- vorable foreign currency exchange reduced net sales by approximately 2.0 percent. Contribut- ing to increased year-over-year sales were new 2017 early-year model ATV/ROV product shipments to dealers. At the same time, Arctic Cat succeeded in decreasing total inventory by $12.4 million, or 8.2 percent, versus the prior- year quarter, despite a softer marketplace and the lack of snow to spur snowmobile sales. Gross profit in the fiscal 2016 fourth quarter was essentially flat compared to the prior-year quarter, chiefly due to increased sales vol- umes, improved absorption and manufacturing productivity, partially offset by unfavorable foreign currency exchange impact. Unfavor- able foreign currency exchange rates reduced gross profit by approximately $2.4 million, or $0.11 per share. Operating loss in the fiscal 2016 fourth quarter was $27.5 million versus an operating loss of $29.0 million in the same quarter last year. Arctic Cat ended the fiscal 2016 fourth quarter with cash and cash equivalents total- ing $17.7 million at March 31, compared to $40.3 million a year ago, and no long-term debt. The company continued to make invest- ments in the business to lay the foundation for future growth and to improve efficiency. BUSINESS LINE RESULTS Snowmobiles — Snowmobile sales in the fis- cal 2016 fourth quarter rose 42.9 percent to $7.5 million versus $5.3 million in the prior- year quarter. Commented Metz: "We have experienced two consecutive years of low snowfall that negatively impacted snowmo- bile sales at the retail and wholesale level, as well as unfavorable foreign currency exchange rates. However, at our March dealer show, we launched one of our most exciting snowmobile lines in years, with many award-winning mod- els. We are well positioned for retail growth when snow conditions improve." Arctic Cat has ramped up its end-user focused new products and introduced a larger snowmobile lineup for the 2017 model year. The company entered an all-new category with the lightweight and agile SVX 450 snow bike, the industry's first purpose-built OEM snow 10 • June 13, 2016 • Powersports Business www.PowersportsBusiness.com Arctic Cat Q4 shows net sales rise; PG&A takes hit STOCK MARKET WATCH Stock Price Percent Company Ticker 5/20/16 Change CDK Global CDK $52.90 11.2% Assurant, Inc. AIZ $87.70 3.7% Carlisle Companies CSL $102.25 0.3% TCF Financial Corporation TCB $13.66 0.1% Cooper Tire & Rubber CTB $31.69 -8.3% MarineMax, Inc. HZO $16.86 -11.3% Bridgestone Corp. ADR BRDCY $16.52 -14.1% Polaris Industries, Inc. PII $83.88 -14.3% Arctic Cat, Inc. ACAT $14.24 -14.4% Universal Technical Institute UTI $3.20 -19.0% POWERSPORTS BUSINESS WINNERS AND LOSERS See Arctic Cat, Page 12 MARKET WATCH Change 5/20/16 from 4/29 % Change Powersports Business Index 228.544 -18.00 -7.30% Dow Jones Index 152.220 -2.37 -1.53% S&P 500 Index 139.685 -0.88 -0.63% Source: Wells Fargo Securities LLC 0 50 100 150 200 250 300 350 10/16/15 11/6/15 12/4/15 12/31/15 1/22/16 2/19/16 3/11/16 4/8/16 4/29/16 5/20/16 PSB INDEX VALUE DOW JONES INDEXED S&P 500 INDEXED STOCK MARKET ACTIVITY DEALER FINANCIAL SNAPSHOT JANUARY TO APRIL 2016 CDK Global Recreation Same Store Sales dealers saw an overall increase of 2 percent from January- April 2015 to January-April 2016. The Northwest, Midwest, South and Northeast all experienced increases overall. Parts decreased in all five of the regions, with the Northeast down the most at 5.9 percent. The West was the only region to decrease overall, down 2.4 percent. PARTS SALES 577 dealers were up, while 910 were down in parts. SERVICE SALES In service, 781 dealers increased and 650 decreased. MAJOR UNIT SALES Major unit sales saw 627 dealers up, while 725 were down. NORTHWEST -1.3% Parts Department 4.1% Service Department 7.3% Major Units 5.6% Overall MIDWEST -1.9% Parts Department 5.0% Service Department 5.1% Major Units 4.1% Overall NORTHEAST -5.9% Parts Department 12% Service Department 6.4% Major Units 5.0% Overall SOUTH -0.5% Parts Department 9.5% Service Department 1.1% Major Units 1.8% Overall WEST -4.6% Parts Department 2.5% Service Department -2.8% Major Units -2.4% Overall UNITED STATES -2.8% Parts Department 6.7% Service Department 2.2% Major Units 2.0% Overall FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: cdkrecreation.com/dataservices CHRISTOPHER METZ