Arctic Cat Inc. has revised its sales and earnings outlook for the fiscal 2008 third quarter ended December 31, 2007, due to lower than anticipated sales of ATVs. As a result, third-quarter net sales are now estimated at $155 million to $160 million, down from $228.1 million in the prior-year third quarter. The company expects a third-quarter net loss of $0.55 to $0.60 per diluted share.
Arctic Cat says it will report its actual fiscal 2008 third-quarter results on Jan. 23.
The Minnesota-based manufacturer now anticipates sales for the full year ending March 31, 2008, to be in the range of $645 million to $665 million, down from sales of $782.4 million in fiscal 2007. Earnings per diluted share for the 2008 fiscal year are now estimated to be between $0.01 and $0.07 versus year-ago diluted earnings per share of $1.15. The company previously estimated net sales for the current fiscal year to be in the range of $710 million to $736 million, with full-year diluted earnings per share in the range of $0.89 to $0.95.
"After reporting seven consecutive years of record sales, we are disappointed with these results and the sluggish ATV environment," said Christopher A. Twomey, Arctic Cat's chairman and chief executive officer. "Our preliminary third-quarter results indicate that while retail sales of Arctic Cat ATVs were in line with the overall ATV marketplace, retail sales of ATVs industrywide continued a year-long decline. Sales of Arctic Cat's snowmobiles remain on plan, while sales of our snow-related parts, garments and accessories are above plan, due to December snow accumulations in key regions."
The industrywide retail ATV sales slowdown has affected all segments of the market, except the large-displacement engine segment, which has shown modest gains.
In light of the current overall industry environment, Arctic Cat is taking steps to produce fewer ATV units in its March quarter. The company plans to cut its annual ATV production by approximately 10 percent during the fiscal fourth quarter ending March 31, 2008. "This action is in keeping with our aim to vigilantly align production and inventory with consumer demand," Twomey says.
Share Repurchase Authorized
Arctic Cat's board of directors has authorized a new share repurchase program of up to $10 million of its common stock. The company has bought back more than 12 million common shares since 1996.
"This share repurchase program supports the company's commitment to increase shareholder value and reflects our belief that the stock represents a good investment," said Twomey.
Share repurchases under this program may be made through open market and privately negotiated transactions from time to time and in such amounts as management deems appropriate. Arctic Cat has approximately 17.9 million common and Class B common shares outstanding.
Editor?s Note: To see how the market reacted to Arctic Cat?s revision, click here.