Arctic Cat Reports 2006 Third-Quarter Results; ATV Sales Continued to Fuel Growth, Outpace Industry; Company on Track to Post 6th Consecutive Year of Record Revenues.THIEF RIVER The Thief River is a tributary of the Red Lake River in northwestern Minnesota in the United States. Via the Red Lake River, the Red River of the North, Lake Winnipeg and the Nelson River, it is part of the watershed of Hudson Bay. FALLS, Minn. -- Arctic Cat Arctic Cat is a producer of all-terrain vehicles and snowmobiles in the United States. Located in Thief River Falls, Minnesota, they are a top competitor with other snowmobile companies such as Polaris, Ski-Doo by Bombardier, and Yamaha Motor Company Ltd.. Inc. (Nasdaq:ACAT ACAT See: Automated Customer Account Transfer ) today reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $195.3 million for the fiscal 2006 third quarter ended December 31, 2005, up 3 percent compared to net sales of $188.9 million in the prior-year period. Third-quarter net earnings were $4.7 million, or $0.24 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, versus net earnings of $5.8 million, or $0.28 per diluted share, in the same period last year. Year-to-date, net sales grew 9 percent to $579.5 million compared to $532.1 million in the year-ago period. Net earnings totaled $24.3 million, or $1.22 per diluted share, versus net earnings of $25.6 million, or $1.22 per diluted share, in the nine-month period last year. "Despite increased raw material costs, we were pleased to report a solid performance during the quarter and first nine months, and we remain on track to post our 6th consecutive year of record revenues," said Christopher A. Twomey, Arctic Arctic area of constant cold. [Geography: WB, A:600] See : Coldness (language, music) Arctic - A real-time functional language, used for music synthesis. ["Arctic: A Functional Language for Real-Time Control", R.B. Cat's chairman and chief executive officer. "Our results have been driven by increased ATV (1) (Advanced TV) An early name for the digital TV standard proposed by the Advisory Committee on Advanced Television Service (ACATS). See ACATS. See also ATV Forum. (2) (Analog TV) Refers to the NTSC, PAL and SECAM analog TV standads. sales and further ATV market share gains for the quarter and year-to-date. We are very pleased that Arctic Cat's ATV sales continue to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, the industry. We attribute our success to growing recognition of our best-in-class products, and Arctic Cat's reputation for innovation and technology leadership." Product Line Results Sales of all-terrain vehicles all-ter·rain vehicle n. Abbr. ATV A small, open motor vehicle having one seat and three or more wheels fitted with large tires. It is designed chiefly for recreational use over roadless, rugged terrain. (ATVs) in the third quarter grew to $90.8 million, up 8 percent from $84.1 million in the same period last year. The company's year-to-date ATV sales rose 20 percent to $268.1 million compared to $223.9 million in the same period last year. Demand for the company's new Prowler utility vehicle has exceeded expectations and contributed to Arctic Cat's ATV sales growth. The Prowler UTV UTV Ulster Television UTV Utility Terrain Vehicle UTV Unmanned Transport Vehicle was introduced in June 2005, marking the company's first entry into the growing utility vehicle category. The Prowler features side-by-side bucket seats and a functional, rear cargo bed. "We continue to benefit from our commitment to drive growth through new product introductions," said Twomey. As an example of this, Arctic Cat plans an early 2007 model introduction of its most powerful ATV yet with a 700cc electronic fuel injection engine. The 700 EFI See UEFI. EFI - Extensible Firmware Interface , announced in December, will begin shipping to dealers in Arctic Cat's fiscal fourth quarter ending March 31, 2006. Added Twomey: "Large displacement displacement, in psychology: see defense mechanism. Same as offset. See base/displacement. engines are the fastest-growing segment in the ATV industry. We are excited about the potential for our new 700 EFI model." As anticipated, Arctic Cat reported snowmobile snowmobile, vehicle designed to travel over snow, ice, and similar surfaces that offer limited traction and weight-supporting capability. As the performance of the vehicle depends to a large extent on keeping its weight as low as possible, there is no enclosure for sales in the third quarter of $74.5 million versus $78.9 million in the prior-year quarter. Year-to-date snowmobile sales are on plan, totaling $238.0 million compared to $241.6 million during the same period last year. "Snowmobile sales are tied to snow conditions," said Twomey. "When it snows, our customers buy sleds. While the market for snowmobiles remains strong among enthusiasts, this industry remains challenged by mild winter-weather conditions in key regions." Parts, garments and accessories (PG&A) sales were $30.0 million, up 16 percent versus $25.8 million in the prior-year third quarter. Contributing to the quarter's PG&A results were increased sales of ATV-related parts and accessories. In areas with ample early snowfall, Arctic Cat also saw increases in snowmobile parts sales. Year-to-date PG&A sales grew 10 percent to $73.4 million compared to $66.7 million in the year-ago period. Arctic Cat repurchased 140,000 shares of its common stock in the fiscal third quarter and has approximately $10.5 million remaining on its current share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. authorization The right or permission to use a system resource; the process of granting access. See access control. . As of December 31, 2005, the company had $63.7 million in cash and no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . Outlook Arctic Cat currently anticipates fiscal 2006 fourth-quarter net sales for the period ending March 31, 2006, to range between $160 million and $170 million, up from $157.0 million for the same period last year. Net earnings for the quarter are estimated to be between $0.09 and $0.13 per diluted share versus earnings of $0.13 per diluted share in the prior-year quarter. For the fiscal year ending March 31, 2006, Arctic Cat now anticipates record net sales in the range of $740 million to $750 million. The company is continuing to forecast lower margins in fiscal 2006, due to increased raw material costs, lower snowmobile sales and a less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. yen/dollar exchange rate, resulting in estimated full-year diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of in the range of $1.31 to $1.35. Fiscal 2005 earnings per diluted share totaled $1.36. Conference Call Arctic Cat will host a conference call today to discuss the third-quarter results at 10:30 a.m. CT (11:30 a.m. ET). To listen to the live Webcast or replay of this call via the Internet, go to the corporate portion of the company's Web site at www.arcticcat.com, and click on the conference call icon. A telephone replay also will be available from approximately 12:30 p.m. CT on Tuesday, January 24, until 6 p.m. CT on Tuesday, January 31. To access the telephone replay, dial 800-405-2236 and enter conference call ID #11051472. About Arctic Cat Arctic Cat Inc. designs, manufactures and markets world-class all-terrain vehicles (ATVs) and snowmobiles under the Arctic Cat(R) brand name, as well as related parts, garments and accessories. Its common stock is traded on the Nasdaq National Market under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors "ACAT." More information about Arctic Cat and its products is available on the Internet at www.arcticcat.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for certain forward-looking statements. The Company's Annual Report, as well as the Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and future filings with the Securities and Exchange Commission, the Company's press releases and oral statements made with the approval of an authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: executive officer, contain forward-looking statements that reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. The words "aim," "believe," "expect," "anticipate," "intend," "estimate" and other expressions that indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to: product mix and volume; competitive pressure on sales and pricing; increase in material or production cost which cannot be recouped in product pricing; changes in the sourcing of engines from Suzuki; warranty expenses; foreign currency exchange rate fluctuations; product liability claims and other legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. in excess of insured amounts; environmental and product safety regulatory activity; effects of the weather; overall economic conditions; and consumer demand and confidence. The Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
ARCTIC CAT INC.
Financial Highlights
(000s omitted, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
---------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net Sales $195,301 $188,855 $579,495 $532,122
Cost of Goods Sold 159,229 151,006 466,061 422,705
--------- --------- --------- ---------
Gross Profit 36,072 37,849 113,434 109,417
Selling, General and
Administrative Expenses 29,754 29,712 78,512 72,602
--------- --------- --------- ---------
Operating Profit 6,318 8,137 34,922 36,815
Other Income
Interest Income 553 380 869 783
--------- --------- --------- ---------
Earnings Before Income Taxes 6,871 8,517 35,791 37,598
Income Taxes 2,198 2,725 11,453 12,031
--------- --------- --------- ---------
Net Earnings $4,673 $5,792 $24,338 $25,567
========= ========= ========= =========
Net Earnings Per Share
Basic $0.24 $0.28 $1.23 $1.24
========= ========= ========= =========
Diluted $0.24 $0.28 $1.22 $1.22
========= ========= ========= =========
Weighted Average Shares
Outstanding:
Basic 19,378 20,413 19,722 20,649
========= ========= ========= =========
Diluted 19,520 20,679 19,893 20,928
========= ========= ========= =========
December 31,
-----------------
Selected Balance Sheet Data: 2005 2004
---------------------------- -------- --------
Cash and Short-term Investments $63,717 $84,244
Accounts Receivable, net 47,141 42,215
Inventories 103,266 90,973
Total Assets 314,753 303,646
Current Liabilities 112,034 100,613
Long-term Debt 0 0
Shareholders' Equity 188,974 190,828
Three Months Ended Nine Months Ended
December 31, December 31,
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Product Line Data: 2005 2004 Change 2005 2004 Change
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All-terrain
Vehicles $90,806 $84,139 8% $268,075 $223,869 20%
Snowmobiles 74,519 78,891 -6% 237,973 241,569 -1%
Parts, Garments
& Accessories 29,976 25,825 16% 73,447 66,684 10%
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Total Sales $195,301 $188,855 3% $579,495 $532,122 9%
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