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Arctic Cat Reports Narrower Loss - Analyst Blog

Posted
5/20/2013 9:27:00 AM
By: Zacks.com
Referenced Stocks:ACAT;PII;POOL;RGR

Arctic Cat Inc. 's ( ACAT ) loss narrowed to $5.1 million or 38 cents per share in the fourth quarter of fiscal 2013 ended Mar 31, 2013 from $6.2 million, or 49 cents per share in the year-ago quarter as well as the Zacks Consensus Estimate of a loss of 40 cents.

Revenues for the quarter increased 15% year over year to $113.2 million, missing the Zacks Consensus Estimate of $119.0 million. The year-over-year improvement was attributable to better sales across all product lines.

Gross profit increased 19% to $13.6 million or 12% of sales from $11.4 million or 11.6% of sales in the year-ago quarter. The company recorded narrower operating loss of $8.8 million compared with $9.6 million in the year-ago quarter. Operating expense rose 6.6% to $22.4 million from $21.0 million year ago.

Segment Results

Revenues from the Snowmobile & ATV business improved 19.3% to $82.3 million, driven by higher revenues from the ATV business, partially offset by a decrease in revenues from the Snowmobiles business.

Revenues from the ATV business surged 16% to $87.6 million. The improvement was driven by higher demand from dealers for the Wildcat side-by-side. The company remained focused on expanding the ATV business and launched two new Wildcat models in the fourth quarter. It also plans to introduce more products in the future. Revenues from the Snowmobiles business (including sales incentives) narrowed to negative $5.3 million versus negative $6.8 million in the prior-year quarter.

Revenues from the Parts, Garments and Accessories (PG&A) business went up 4.9% to $31.0 million. The increase was due to improved snowmobile parts sales owing to better snow conditions in northern U.S.

Financial Position & Share Repurchase

Arctic Cat had cash and short-term investments of $112.8 million as of Mar 31, 2013, compared with $62.6 million as of Mar 31, 2012. The company had no long-term debt in the reported quarter.

The board of directors of Arctic Cat authorized a share repurchase program of $30 million of the company's common stock.

Fiscal 2013

For fiscal 2013 (ended Mar 31, 2013), Arctic Cat posted a 68% increase in earnings to $2.89 per share versus $1.72 per share in fiscal year 2012. Net income improved 32.7% to $39.7 million from $29.9 million year ago.

Revenues escalated 15% to $671.6 million from $585.3 million last fiscal year. The improvement in earnings and revenues was due to higher sales volumes, together with focus on operational excellence and cost efficiency.

Outlook

Arctic Cat expects revenues between $754 million and $768 million for fiscal year ending Mar 31, 2014, representing a year-over-year increase of about 12% to 14%. The company expects earnings per share to be in the range of $3.17 to $3.27 and the earnings guidance reflects a year-over-year rise of 10%-13%.

Our Take

Arctic Cat makes snowmobiles and ATVs under the Arctic Cat brand name and supplies related parts, garments, and accessories. The company markets its products through a network of independent dealers located throughout the U.S and Canada, and through distributors representing dealers in AK, Europe, Middle East, Asia and other international markets. It currently holds a Zacks Rank #3 (Hold).

Sturm, Ruger & Co. Inc. ( RGR ), Polaris Industries, Inc. ( PII ) and Pool Corp. ( POOL ) are performing well in the same industry where Arctic Cat operates. While Smith & Sturm, Ruger & Co. is a Zacks Rank #1 (Strong Buy) stock, Polaris Industries Inc. and Pool Corp. are Zacks Rank #2 (Buy) stocks.



ARCTIC CAT INC (ACAT): Free Stock Analysis Report

POLARIS INDUS (PII): Free Stock Analysis Report

POOL CORP (POOL): Free Stock Analysis Report

STURM RUGER&CO (RGR): Free Stock Analysis Report

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