Yamaha partnership leads to increased snowmobile sales for Arctic Cat

Publish Date: 
Jul 25, 2014
By Vince Guerrieri

MINNEAPOLIS, Minn. – Arctic Cat’s partnership with Yamaha continues to reap benefits for the company, which reported record sales in the first quarter, let by a 149 percent increase year-over-year in snowmobile sales.

In a conference call outlining quarterly results, interim CEO Chris Twomey said strong snowmobile sales, along with strong demand for the Wildcat Trail ATV unit, led to a record $143 million in sales and $30.8 million in gross profit for the quarter, which ended June 30. However, Twomey said net income was down for the company, to $3.6 million, versus $5.5 million a year ago, because of product mix and continued issues with the Canadian exchange rate.

“We still anticipate the year to result in record-breaking sales, and we continue to make investments to R&D to maintain our future,” Twomey said.

Dealers had identified lack of innovation as a concern in a recent Baird/Dealernews survey – and some had expressed the desire to stop dealing Arctic Cat products for a variety of reasons. Twomey was asked about dealer churn, and said he hadn’t heard of a significant difference, so there probably wasn’t one. He also said the company will aggressively try to add new dealers.

“While I’m here, I’m going to be pushing that as much as I can,” he said.

Twomey also said strengthening the company’s relationship with dealers was a goal for the ATV dealer show in September – addressing another concern expressed by dealers in the Baird/Dealernews survey.

Under Arctic Cat’s deal with Yamaha, Arctic Cat makes chassis for Yamaha, which makes four-stroke engines for Arctic Cat. Arctic Cat’s snowmobile sales in the first quarter totaled $56.2 million. Sales in parts, garments and accessories grew by 8 percent to $23.7 million, and sales of ATVs were down 16 percent year-over-year, to $63.8 million.

The Wildcat Trail vehicle led interest and sales for ATVs, and had a positive impact in PG&A, said Chief Financial Officer Tim Delmore. Twomey said the company will make efforts to meet demand expressed by dealers and customers.

Twomey was conducting his first quarterly call in than four years. He retired as CEO in 2010, but was tapped to serve in the position on an interim basis after Arctic Cat cut ties with CEO Claude Jordan.  Of the $4.5 million year-over-year increase in administrative expenses for the quarter, $1.5 million was a severance payment to Jordan.

Twomey said he has an agreement through September with the company, which retained executive headhunting firm Spencer Stuart earlier this month to help find a new CEO.

“We have already reviewed a number of candidates on paper,” Twomey said. “We expect the search will be done by the end of September.”