(Source: Business Wire)
Arctic Cat Inc. (Nasdaq:ACAT) today reported a net loss of $16.7 million, or $0.93 per diluted share, on net sales of $90.7 million for the fourth quarter ended March 31, 2009, which was within the company's previously stated guidance range. Arctic Cat's 2009 fourth quarter results include a non-cash goodwill impairment charge of $1.75 million, or a $0.10 loss per diluted share, in accordance with Statement of Financial Accounting Standards (SFAS) No. 142. The non-cash goodwill write-down has no impact on Arctic Cat's cash flow or liquidity.
Excluding the goodwill impairment charge, the fourth quarter net loss would have been $15.0 million, or $0.83 per diluted share. For the prior-year fourth quarter ended March 31, 2008, Arctic Cat reported net earnings of $424,000, or $0.02 per diluted share, on net sales of $168.9 million.
For the fiscal 2009 full year, Arctic Cat posted net sales of $563.6 million compared to $621.6 million last fiscal year. The company reported a fiscal 2009 net loss of $9.5 million, or $0.53 per diluted share, including the $0.10 per share goodwill impairment charge, versus a net loss of $3.3 million, or $0.18 per diluted share, in fiscal 2008.
"Arctic Cat was profitable through the first nine months of fiscal 2009, due to increased snowmobile sales to dealers and distributors and lower operating expenses, but overall retail demand for recreational products remained weak in the fourth quarter as expected," said Christopher A. Twomey, Arctic Cat's chairman and chief executive officer. "In light of the difficult retail environment, we continued our plan to further reduce dealer inventories during the quarter, resulting in lower inventory levels across all product lines. However, this necessary action negatively impacted the company's revenue and profitability for the fourth quarter and full year."
Business Line Results
All-terrain vehicle (ATV) sales totaled $64.1 million in the 2009 fourth quarter versus $142.9 million in the same period last year. For fiscal 2009, Arctic Cat's ATV sales were $247.3 million compared with $350.3 million last fiscal year. ATV revenues were down for the quarter and full year due to lower ATV retail sales during the current economic downturn, and the company's decision to lower production to reduce dealer inventory.
Snowmobile sales improved to a negative $3.4 million in the 2009 fourth quarter due to lower promotional sales incentives on dealer inventory compared with a negative $7.1 million in the prior-year quarter. For the 2009 fiscal year, Arctic Cat's snowmobile sales rose to $207.3 million versus $161.9 million in the previous year. Contributing to the full-year snowmobile sales growth were innovative new products, lower North American dealer inventories and increased international sales.
Sales of parts, garments and accessories (PG&A) in the 2009 fourth quarter were $30.0 million versus $33.0 million in the prior-year quarter. For the full fiscal year, PG&A sales were essentially flat at $109.0 million versus $109.4 million in fiscal 2008.
Impairment Charge
As noted above, Arctic Cat reported a non-cash impairment charge of $1.75 million, or a $0.10 loss per diluted share, due to the write-down of goodwill. The company recently completed its annual goodwill evaluation in accordance with SFAS No. 142. This evaluation resulted in an impairment charge due to the company's fiscal year fourth quarter and annual operating results, and continued decline in Arctic Cat's stock price resulting in a market capitalization below book value. The charge is non-cash and does not affect the company's cash flow or liquidity.
Outlook
As previously announced on January 29, 2009, Arctic Cat is continuing to implement initiatives aimed at returning the company to profitability on lower anticipated sales volumes.
