The 2016 Wildcat 4X, a higher priced ($20,999 MSRP) model in the Arctic Cat lineup, is expected to improve the company’s revenue in the rest of the fiscal year.

Last week Arctic Cat reported their financial results for the second quarter of fiscal year 2016, which ended on September 30, 2015. Arctic Cat reported quarterly revenue of $211.2 million and net earnings of $11.2 million compared to $262.5 and $15.4 for the prior year quarter. Management noted currency headwinds, especially in Canada, a competitive market and softer than expected retail sales in the ATV/UTV market. Therefore, the company’s management lowered their fiscal 2016 full year guidance. The following are some the highlights from the earnings call related to the side-by-side/utility vehicle market.

• Sales of ATVs and ROV side-by-sides increased 1.7% to $70.8 million from $69.6 million in the year ago quarter driven by Wildcat side-by-sides.
• A key marketing initiative was started with a five year product development and marketing agreement with racer Robby Gordon and Todd Romano, and their SPEED RMG brand. The initiative specifically targets technology development for the Wildcat side-by-sides to produce new products and accessories.
• For full year fiscal 2016 management expects ATV/side-by-sides sales to increase mid-single digits percent.
• For the quarter, the industry retail sales were flat to up low single-digits for ATVs and side-by-sides and Arctic Cat was similar overall but with more strength in side-by-sides.
• Year-to-date Arctic Cat was up low double digits for side-by-sides retail sales.
• Management is terminating under-performing dealerships while adding dealers in open territories.

Learn more:  Seekingalpha.com (Earnings call transcript)

Comment:  Both Polaris and Arctic Cat have reported slower than expected growth in the side-by-side market, as well as, increasing competitiveness. While the market is still expected to grow, the rate of growth may be more mid-single digit percent rather than double digits or even high single digits.