arctic cat fourthquarter results announced

Net sales for Arctic Cat Inc. were nearly down $4 million from $172.6 million in the fourth quarter last year to $168.9 million for this recently ending fourth quarter. There was a small net earnings though of $424,000, versus a net loss of $1.6 million last fourth quarter. This suggests that while Cat may be recoiling from its first large decline after several years of record sales growth, the company is becoming leaner and will hopefully be profitable in 2009.

Weak ATV demand was the underlying theme for much of the loss. Also, a planned reduction of both ATVs and snowmobiles was finally realized in this quarter. "We achieved our goal to significantly reduce dealer inventory levels in fiscal 2008 through planned production cuts," said Christopher A. Twomey, Arctic Cat's chairman and CEO. There was also an ATV parts supply issue on the Prowler utility vehicle, which occurred during the fourth quarter that affected earnings.

Twomey was disappointed in the company's performance, but knew that fiscal year 2008 would be a difficult year as production levels were lowered to help reduce dealer inventories. Twomey also mentioned macro-economic factors lead to weak consumer confidence coupled with low discretionary spending.

Snowmobile sales were a negative $7.1 million in the fourth quarter of 2008, which is a huge loss compared to a negative $1.8 million just last year. Total sled sales for 2008 were down about $85 million from the previous year. $161.9 million was posted as the sales total for 2008, and in 2007, that number was $247 million. Snowmobile production was reduced 30 percent for fiscal year 2008 to align inventory with retail demand.

Parts, garments and accessories grew 15 percent in the fourth quarter from $28.6 million last year to $33 million in 2008. The increase was mainly due to PGA profitability on the snowmobile side with solid sales from ATV parts and accessories.

Arctic Cat expects to return to profitability for 2009, hoping for increased snowmobile revenues and flat to slightly higher ATV revenues based on the Prowler UTV and international ATV sales. A total growth of 5-8 percent is projected for the next fiscal year.