Arctic Cat Reports Fiscal 2009 First-Quarter Results

MINNEAPOLIS--(BUSINESS WIRE)--Arctic Cat Inc. (Nasdaq:ACAT) today reported net sales increased 7 percent to $93.9 million for the fiscal 2009 first quarter ended June 30, 2008, from net sales of $87.9 million for the same period last year. The net loss for the quarter was $7.0 million, or $0.39 per diluted share, versus a net loss of $7.2 million, or $0.39 per diluted share, in the prior-year period.

“Consolidating the number of chassis platforms is a result of our lean initiative to reduce design and manufacturing costs and improve margins, while offering customers exciting new, best-in-class products”

“Our first-quarter results benefited from the timing of shipments to dealers for snowmobiles and parts, garments and accessories,” said Christopher A. Twomey, chairman and chief executive officer of Arctic Cat. “We continue to expect the company to return to profitability this fiscal year. While our markets will remain challenging, due to persistent weakness in the economy, and higher commodity prices pose some risk to our outlook, we are better positioned to attain modest growth and profitability in the year ahead, due to the strategic actions we took last fiscal year.”

Arctic Cat’s all-terrain vehicle (ATV) sales were down 10 percent to $53.8 million in the 2009 first quarter versus $59.7 million in the same period last year. In the current fiscal year, Arctic Cat anticipates that its ATV revenues will be flat. The company does not expect core ATV retail sales to pick up until the overall economy strengthens.

“The growth segments of the ATV market are two-passenger utility ATVs and UTVs, as well as those with the large-displacement engines,” said Twomey. “We are confident that our new Prowler XTZ 1000, Thundercat® 1000 and Thundercat TRV® fit nicely in this growth niche and are very competitive products.”

During the first quarter, Arctic Cat unveiled its new 2009 model ATVs to dealers, including an extension of the Prowler UTV line. The company’s new high-performance Prowler XTZ 1000 combines a side-by-side with an Arctic Cat-engineered 1000cc engine, making it the most powerful UTV available in the industry. New 2009 model Prowlers also are available in different engine sizes and with options such as a flatbed or big cargo box, a fully enclosed cab and customizable accessories.

Snowmobile sales increased 80 percent to $21.4 million, up from $11.9 million in the prior-year first quarter, due to the timing of shipments. “We are encouraged to see the generally high level of enthusiasm for our snowmobile business from dealers and customers,” Twomey said.

Among the highlights of Arctic Cat’s new 2009 model line-up is a 177 horsepower turbocharged four-stroke engine, which is offered in several 2009 models. This is the largest horsepower engine in the snowmobile industry and currently exceeds 2012 EPA emissions standards. In addition, the company’s mountain machines continue to be among the lightest and most powerful, and its utility line of snowmobiles, particularly important in the Canadian market, has been completely redesigned on the F3 chassis.

“Consolidating the number of chassis platforms is a result of our lean initiative to reduce design and manufacturing costs and improve margins, while offering customers exciting new, best-in-class products,” said Twomey.

Parts, garments and accessories (PG&A) sales grew 15 percent to $18.7 million versus $16.3 million in the year-ago period. PG&A benefited from both ATV- and snowmobile-related sales. New products and lower dealer inventories generated increased orders.

“We are optimistic that we will continue to grow PG&A sales, with additional focus and attention under our new leadership for this business,” said Twomey.

Outlook

For the fiscal year ending March 31, 2009, Arctic Cat expects net sales to grow between 5 percent and 8 percent, and be in the range of $650 million to $674 million, based on increased snowmobile revenues, anticipated ATV revenues and a better overall product mix. Full-year diluted earnings per share are anticipated to be in the range of $0.18 to $0.28.

Arctic Cat remains focused on achieving growth by offering innovative products that drive market share gains, lowering costs through its strategic sourcing initiative and by further leveraging its efficiency. The company expects to save approximately $5 million to $6 million in fiscal 2009 through its strategic sourcing initiatives, although these savings will be partially offset by higher commodity prices.

Arctic Cat’s second-quarter net sales, for the period ending September 30, 2008, are estimated to be in the range of $189 million to $199 million versus net sales of $205.2 million in the same period last year. The second-quarter net earnings is estimated to be in the range of $0.60 to $0.70 per diluted share versus net earnings of $13.9 million, or $0.76 per diluted share, in the prior-year quarter.

Conference Call

A conference call is scheduled for 10:30 a.m. CT (11:30 a.m. ET) today. To listen to the live webcast or replay of this call via the Internet, go to the corporate portion of the company’s website at www.arcticcat.com. To listen to a telephone replay of the conference call, dial 800-405-2236 and enter conference call ID 11117551. The replay will be available through July 31, 2008.

About Arctic Cat

Arctic Cat Inc. designs, engineers, manufactures and markets all-terrain vehicles (ATVs) and snowmobiles under the Arctic Cat® brand name, as well as related parts, garments and accessories. Its common stock is traded on the Nasdaq Global Select Market under the ticker symbol “ACAT.” More information about Arctic Cat and its products is available at www.arcticcat.com.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements. The Company’s Annual Report, as well as the Report on Form 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 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 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.

FINANCIAL TABLES FOLLOW
			ARCTIC CAT INC.
			Financial Highlights
			(000s omitted, except per share amounts) (Unaudited)
			Three Months Ended June 30,
				2008				2007
Net Sales			$	93,877			$	87,862
Cost of Goods Sold				79,878				75,044
Gross Profit				13,999				12,818
Selling, General And
Administrative Expenses				22,153				23,223
Operating Profit (Loss)				(8,154	)			(10,405	)
Other Income (Expense):
Interest Income				72				430
Interest Expense				(204	)			(61	)
				(132	)			369
Earnings (Loss) Before				(8,286	)			(10,036	)
Income Taxes
Income Tax Expense (Benefit)				(1,323	)			(2,881	)
Net Earnings (Loss)			$	(6,963	)		$	(7,155	)
Net Earnings (Loss) Per Share
Basic			$	(0.39	)		$	(0.39	)
Diluted			$	(0.39	)		$	(0.39	)
Weighted Average Shares Outstanding
Basic				18,019				18,397
Diluted				18,019				18,397

			June 30,
Selected Balance Sheet Data:				2008		2007
Cash and Short-term Investments			$	5,790		$ 5,458
Accounts Receivable, net				45,419		44,024
Inventories				156,152		149,533
Total Assets				306,193		310,501
Current Liabilities				121,952		118,800
Long-term Debt				0		0
Shareholders' Equity				173,110		180,136

				Three Months Ended
				June 30,
Product Line Information					2008			2007		Incr %
All-Terrain Vehicles				$	53,774		$	59,716		-10	%
Snowmobiles					21,416			11,888		80	%
Parts, Garments & Accessories					18,687			16,258		15	%
Total Sales				$	93,877		$	87,862		7	%