New models drive Arctic Cat gains
Consumers are buying Arctic Cat snowmobiles, helping the company boost its sales and profits.
At Century Power Sports in Stillwater, sales have been good. Two motivators for buyers: memories of lots of snow last year and a new lineup of snowmobiles from Arctic Cat. The new models have brought shoppers in to take a look. "The interest they have with an all-new product line is probably as high as it’s been in 10 years," said owner Roger Tuckner.
A lineup of 23 new Arctic Cat snowmobiles unveiled in March seems to be giving consumers reason to dig into their wallets for sleds with price tags ranging from $8,995 to $13,500 at Century.
The big test will be in November and December, when snowmobile sales at the dealership are typically at their highest as people get motivated when they see snow.
"The consumer seems to be doing better, if you look at Polaris and if you look at Arctic Cat," said Mark Smith, an analyst for Feltl and Co. in Minneapolis. He follows both Twin Cities-based competitors. "The consumers buying these things are obviously doing well. We’re seeing both companies growing sales."
Plymouth-based Arctic Cat reported fiscal 2012 second- quarter sales Thursday of $205 million, up 17 percent from the prior year. Profits were up 20 percent, to $21.4 million or $1.15 cents per share, 7 cents above analysts’ expectations.
The positive earnings report sent the stock up 20 percent, or $3.43, Thursday to $20.76. During the trading day, the share price hit a 52-week high of $20.83.
Fueling the big sales were snowmobiles, which were up 25 percent to $115 million. Sales of all-terrain vehicles were up 4 percent to $59 million, driven mainly by international sales.
"Overall we are pleased with our financial performance for the quarter," said Claude Jordan, Arctic Cat’s chief executive officer.
The quarter’s results mark a big change from 2008 and 2009, when the company posted annual losses. In response to dipping sales, the company cut its workforce, reduced officer’s base pay and shu down manufacturing several times.
"If I go back a couple years ago, certainly we were very internally focused on what can we do in terms of cost controls and things of that nature," Jordan said in response to an analyst’s question about possible acquisitions.
Now, he said, the focus has moved back to growth – both internally through continued investments in new product development and in terms of "strategic opportunities out there."
For the year, management raised revenue guidance in the range of $530 million to $545 million from $520 million to $530 million and raised earnings per share to $1.10 to $1.15 from 94 cents to $1.
