Christopher Metz, CEO of Arctic Cat, recently answered questions about the company’s Q2 recent financial performance. He also confirmed the fact that the company will soon release a new Arctic Cat snowbike.
Here are some highlights from Christopher Metz’s presentation:
“We made continued solid progress in the second quarter. The company executed well on our strategies to reposition the business for a return to growth in fiscal 2017 and beyond. We accelerated the pace of product innovation and marketing initiatives and we are on target with our efforts to reduce non-current inventory. However, sales and earnings in the quarter were dampened by greater than anticipated Canadian currency exchange impact and a softer industry-wide ATV/ROV retail market."
"Arctic Cat's fiscal 2016 second quarter net sales were $211.2 million and we posted net earnings of $0.85 per diluted share. Given the intensifying currency headwinds, a competitive market and weaker than anticipated industry-wide ATV/ROV retail sales, we are lowering our fiscal 2016 full year guidance."
"I want to reiterate what I said on our last quarter earnings call, our fiscal 2020 goal is to reach over $1 billion in net sales with gross margins in the range of approximately 27% to 28% and we remain on track to achieve our 2020 goal.”
“Our 2016 (ATV) lineup features seven all-new products, including four special edition models built in limited quantities and more powerful Wildcat Sport models and the introduction of the new Alterra ATV brand. Our dealers have enthusiastically welcomed these new products.”
“In September, we previewed a prototype of the single-ski snow vehicle named the Arctic Cat SVX 450 at the 2015 Haydays Grass Drags in Minnesota. We've developed the industry's first purpose built OEM snow bike and snow biking is a growing sport class in Western North America. Our patented SVX 450 snow bike is designed to provide an exciting new riding experience for the category of riders who want the lightest, most affordable vehicle for mountain riding. We look forward to efficiently introducing our snow bike in the near future and this is just another example of our focus on product innovation.”
“We aim to create a brand marketing powerhouse. Arctic Cat's brand promise is to create the ultimate off-road riding experience. Our objective is to deliver passionate and exciting experiences at all customer touch points to drive double-digit retail sales growth every year. To achieve this, we are enhancing our field marketing, advertising and team training. You'll continue to hear more about Arctic Cat's expanded marketing efforts on our quarterly calls with you.”
Chris Eperjesy, Chief Financial Officer stated, “Sales of ATVs and ROV side-by-sides increased 1.7% to $70.8 million from $69.6 million in the year ago quarter; contributing to sales were Wildcat side-by-sides. We continued to curtail wholesale shipments of core ATV models in the second quarter to support our effort to reduce core ATV inventory at our North American dealers. Unfavorable product mix and foreign currency translation also negatively impacted the year-over-year comparison."
Snowmobile sales totaled $109.9 million, a decrease of 30.3% compared to $157.8 million in the prior year quarter, stemming from lower international sales to Russia, unfavorable foreign currency exchange and lack of snow in key regions last year. As Chris mentioned, year-to-date snowmobile sales are on plan to meet the company's full year expectations.”
“For the fiscal year ending March 31, 2016 Arctic Cat now estimates full year net sales in the range of $665 million to $675 million, with a much greater unfavorable foreign currency exchange impact of the range of $27 million to $30 million pre-tax. We now expect fiscal 2016 full year net earnings to be in the range of $0.05 to $0.15 per share, again reflecting unfavorable foreign currency exchange rates particularly the Canadian dollar. Approximately 30% of Arctic Cat's annual sales are to Canada. -- Snowmobile sales to dealers down mid-teens as we focus on reducing non-current dealer inventory. Our retail snowmobile sales are anticipated to outpace the industry average. ATV side-by-sides sales up mid-single-digits and PG&A sales to be up mid-single-digits.”
Source: Seeking Alpha