Arctic Cat Reports Q2 2017 Results

Posted on November 10, 2016 by Marc Cesare

By Marc Cesare, Smallvehicleresource.com

The 2017 Wildcat X from Arctic Cat with RG Pro suspension is expected to help drive sales in the second half of the fiscal year.

Arctic Cat reported financial results for the fiscal 2017 second quarter ended September 30, 2016. The company reported a loss of $12.8 million on sales of $164.6 million compared to net earnings of $11.2 million and sales of $211.2 million in the prior-year quarter. Management pointed to a softer powersports market, as well as lower sales volume, unfavorable product mix and heightened promotional environment as factors. Sales of ATVs and side-by-sides totaled $44.0 million for the quarter, down 37.8 percent compared to prior-year sales of $70.8 million. Year-to-date sales totaled $87.8 million, down 29 percent from $123.6 million in the prior-year first half.

The following are some highlights from the earnings call related to side-by-sides:

Weakness in oil, gas and agriculture sectors contributed to softer sales
ATV and SxS retail sales decreased approximately 4% in the second quarter versus an industry that was down low single-digits. Wholesale sales decreased further as management is trying to reduce dealer inventory levels.
New products including those designed with Robby Gordon have been released, and a third wave of models this fiscal year will be introduced by late February
The company has added 28 top-tier dealers to their network but is likely to miss their target of 75 for the fiscal year. Net dealer add is flat.
For the short term management anticipates continued market softness, competitiveness and foreign currency headwinds
ATV/SxS sales are expected to be flat to down mid-single digits for the full year but up in the second half driven by new product introductions.
The company announced two new strategic partnerships for developing products for adjacent markets but cannot release more details, including whether they involve SxSs.

Learn more: Seekingalpha.com (Earnings call transcript)

Polaris Announces Q3 2016 Results

Posted on October 27, 2016 by Marc Cesare

The Polaris RXR XP Turbo is being recalled because of a potential fire hazard.

Recalls of vehicles like the Polaris RXR XP Turbo were a drag on the company’s financial performance for the quarter.

Polaris Industries announced their financial results for Q3 2016 with third quarter sales down 19% to $1.18 billion as impacts of massive vehicle recalls are still being felt. CEO Scott Wine stated that the company is prioritizing “…recall execution and quality validation and delay the launch of many of our model year 2017 Off-Road Vehicles.” The following are highlights from the earnings call as they relate to the small, task-oriented vehicle market.

Off-road vehicle industry retail declined modestly (down low single digits%) for the quarter with oil/gas and agriculture segments remaining weak
ORV and Snowmobile segment sales declined 23% in Q3 to $923.4 million driven by weak industry dynamics and delayed model year 2017 shipments as products were revalidated
RZR retail dropped precipitously in the first two months of the quarter but improved significantly in the third month along with overall side-by-side retail driven by promotions and better product availability
Management reports that RZR recalls have now passed the 50% penetration rate for both the RZR 900/RZR 1000 recall and the more recent Turbo recall and the majority of the recalls should be completed by year end
Gross margins were negatively impacted by higher promotional and customer appreciation costs to bolster confidence and credibility with our Off-Road Vehicle owners
The Ranger 1000 has shown good early signs for sales
Management reports that RZR market share is nearly 2.5 times all competitors combined and Ranger share over 2 times the next largest competitor
Global Adjacent Markets segment revenue increased 6% to $78.5 million in Q3 driven by the prior Taylor-Dunn acquisition
Sales in the Defense business and Work and Transportation businesses were lower quarter-over-quarter due to delayed military orders and weak rental and B2B sales
RFM inventory management system will be aggressively rolled out next year and should improve ORV dealer’s ability to replenish vehicles, manage inventory and make models available to customers
Guidance for full year 2016:
- ORV and Snowmobile sales are expected to be down high single digits to low double digits percent but should show some retail growth in Q4
- Defense and Work and Transportation segment sales are expected to be up high single digits for the year

Learn more: Seekingalpha.com (earnings call transcript)

Arctic Cat Reports Q1 2017 Results

Posted on August 4, 2016 by Marc Cesare

The new Arctic Cat HDX 700 Crew XT for model year 2017 helped drive sales for the quarter.

Arctic Cat recently reported financial results for fiscal year 2017 first quarter which ended June 30, 2016. Management reported sales of $104.9 million and a loss of $0.81 million for the quarter compared to $134.4 million and $1.1 million for the prior year quarter.

The following are highlights from the earnings call related to the utility vehicle market.

Management reported progress on expanding their dealer network, adding 17 top tier dealers in underrepresented territories during the quarter. The goal is to add 75 top-tier dealers for the FY.
Dealer inventory was reduced during the quarter
A new state-of-the-art R&D facility expansion in St. Cloud, Minnesota, which will become home for all new wheeled product development, was finished
Sales of ATVs and ROVs (side-by-sides) in the 2017 first quarter totaled $43.7 million, down 17.3% compared to prior-year sales of $52.9 million.
Sales of ROVs including Wildcat were strong while core ATV sales decreased
Arctic Cat ROV retail sales declined high single digits versus a ROV market up low single digits compared to prior year quarter that had tough comparables. ROV retail picked up towards the end of the quarter driven by new products.
New models were introduced including the 6-passenger HDX Crew UTV and the entry priced Prowler 500
Key marketing initiatives include Arctic Cat 360 where virtual reality headsets allow consumers visiting Arctic Cat event displays and dealerships to feel the thrill of riding an Arctic Cat Wildcat side-by-side in a realistic 360-degree world, and Wildcat stadium side-by-side races.
Management reports a strong rebate and incentive environment. Pricing is competitive unless you have a “hero” product that can sustain a premium price.
Product mix indicates some shifting to lower priced vehicles
Guidance for the full fiscal year includes sales of $635 million to $655 million with second half sales driven by new product launches. ATV/ROV sales should be flat to up low single digits.

Learn more: Seekingalpha.com (Earnings call transcript)

Polaris Reports 2016 2nd Quarter Earnings

Posted on July 22, 2016 by Marc Cesare

The very large recall of RZR vehicles impacted Polaris 2nd quarter side-by-side revenue.

Polaris Industries reported fiscal year 2016 second quarter earnings with sales increasing 1% from the same quarter last year to reach $1,130.8 million. Net income was down 29% to $71.2 million, reflecting approximately $25 million in warranty, legal and recall costs. Here are some of the highlights of the earnings callrelated to small, task-oriented vehicles.

ORV (ATV and UTV) sales decreased 6% in the quarter with Ranger shipments flat and RZR/ATV shipments down
RZR retail was down significantly more than RANGER and that was anticipated given the impact from the recall
North American (NA) ORV inventory was down 8%
Demand for the new General line of UTVs is exceeding company expectations
The Huntsville, AL plant is ramping up Ranger and Slingshot production
NA retail market for side-by-sides was flat and declining for ATVs
Management reports losing a few points of side-by-side market share attributable more to their product lineup in the utility segment in a competitive environment
NA retail market for side-by-sides was flat and declining for ATVs
Polaris NA retail was down double digits for ORV for the quarter impacted by the large product recall as well as weakness in the oil and ag markets with side-by-side retail down high single digits
Product recall costs have been approximately $27 million for the first half of the year. The company has had a 30% response rate so far and the Consumer Product Safety Commission is targeting a response rate close to 80%
Global adjacent market sales increased 14% in the second quarter to $91 million including PG&A, driven by market share gains in Aixam and the added sales from the Taylor-Dunn acquisition.
Management reports that Taylor-Dunn’s “performance out of the gate, it’s been one of our best acquisitions yet” and they like what is essentially a made to order model along with synergies for the people mover segment with other global adjacent brands
The defense business was up over 30% and our PG&A related sales for the global adjacent division increased 21%.
Defense sales were up with the DAGOR vehicle gaining traction
Multix early sales have been disappointing but transmission issues were fixed during the 2nd quarter and the distribution network is expanding
Polaris will begin transitioning their RZR and Ranger lines to their retail flow management system to improve lead times and inventory management
ORV and Snowmobile sales are expected to decrease mid-single digits
Global Adjacent markets which includes GEM, Aixam, Goupil, etc. is expected to be up mid teens for the year with strength across brands

Learn more: Seekingalpha.com (Earnings call transcript)

Kawasaki Recalls 28,000 Mule UTVs

Posted on July 8, 2016 by Marc Cesare

One of the Kawasaki Mule models being recalled.

Kawasaki announced the recall of approximately 28,000 of their Mule UTVs because the front floor cover can be punctured by a foreign object, posing an injury hazard to riders. There has been one report of debris striking an operator’s leg. The recall covers a wide range of Mule models for model year 2015, 2016 and 2017 including the PRO-FX, PRO-FXT, PRO-DX and PRO-DXT models and related configurations. specific models affected are described below. Towards the end of last year Kawasaki recalled a large number of their Teryx recreational UTVs for a similar floor issue.

The following information is from the Consumer Product Safety Commission.

Recall Details

Units: About 28,000

Description: The recall involves 2015, 2016 and 2017 model year side-by-side recreational off-highway vehicles. The recalled models are 4-wheel side-by-side seating for three to six people and automotive style controls. The vehicles come in various colors. The model name is printed on the right and left front fender. The vehicle identification number (VIN) is located on the steel frame between the right front lower A-arm mounts.

Incidents/Injuries: Kawasaki has received two reports of debris coming up from the floor cover, including one report of debris striking an operator’s leg.

Remedy: Consumers should immediately stop using the recalled vehicles and contact their local authorized Kawasaki dealer to schedule a free repair.

Sold at: Kawasaki dealers nationwide from July 2014 through June 2016 for between $12,000 and $16,900.

Manufacturer(s): Kawasaki Motors Corp., U.S.A. of Foothill Ranch, CA.

U.S.

Learn more: CPSC.gov

Comment: This is a large recall and combined with the previous Teryx recall for the same reason brings the total number of vehicles involved to 47,500. What is disconcerting is that it seems to be a basic design flaw in that the company did not engineer the front floor boards to be strong enough to withstand normal use. On the heels of major recalls from Polaris, there are now almost a quarter million UTVs being recalled from two of the most prominent brands in the market, most from the last several model years.

BRP Reports Quarterly Results: FY2017 Q1

Posted on June 9, 2016 by Marc Cesare

The new 2017 Defender MAX DPS HD8 from Can-Am in Mossy Oak Break-up Camo is expected to help drive BRP’s earnings in FY2017.

BRP, manufacturer of Can-Am side-by-sides, announced results for the first quarter of fiscal year 2017 which ended April 30, 2016. The following are highlights related to the small, task-oriented vehicle market. (Figures in Canadian $)

Revenues increased 4% for the quarter to $919.9 from $898.1 in Q1 last year.
Net income increased $110.7M, an increase of $27.6M compared to the same period last year.
Management reports Can-Am powersports retail outpaced the industry in all geographical markets.
Year-Round Products business which includes side-by-sides, ATVs and the Spyder increased 1% to $400.2 for the quarter.
Can-Am side-by-side (SSV) retail grew mid-single digits, slightly lower than industry pace.
Management reports good early momentum for the Can-Am Defender.
Management expects to launch new SSV every 6 months for four years.
New models have been more specialized to target specific applications or sub-segments such as mud riding or entry level price points.
Management expects Year Round Products revenue to increase 6% to 10% for fiscal year 2017 driven in part by Can-Am Defender shipments, new product introductions and richer product mix.

Learn more: BRP.com

Polaris Reports Q1 2016 Earnings

Posted on April 22, 2016 by Marc Cesare

One of the Polaris RZR models involved in the large first quarter vehicle recall.

Polaris reported earnings for the first quarter 2016 fiscal year with sales and earning declining for the second consecutive quarter. Revenue was down 5% to $983 million driven by inventory management and currency impacts. Earnings per share was down a significant 45% with currency, volume and mix and considerable legal and warranty costs more than offsetting leaner operations. The following are some of the highlights related to the small, task-oriented vehicle market.

Polaris is recalling more than 160,000 RZR vehicles to address fire and other thermal risks. This figure appears to include vehicles outside the US as the CPSC reported a figure of 133,000.
Management expects to “…address all of the recalled vehicles within the quarter…” and emphasized their commitment to resolving the issue quickly.
Side-by-side dealer inventory declined upper single digit percent in the quarter.
Year-over-year (YOY) North American side-by-side retail decreased slightly in an industry up mid to high single digits, so some market share was lost.
Management is positive about the performance of the new GENERAL product line and reports cannibalization of Ranger and RZR lines is not significant.
Side-by-side market remains weak in oil producing states but overall management is optimistic about the ORV (ATV & side-b-side) industry.
Management reports higher variability from month to month and regionally in the ORV market.
The Global Adjacent Markets business unit saw a 8% decrease in revenue with strength in Aixam, national accounts and GEM offset by weakness in Bobcat and Brutus. Defense business (MRZR and Dagor) declined “significantly” due to tough comparables but the order backlog is up.
The European ORV industry grew low single digits in the first quarter, with Polaris retail outperforming, up mid-single digits.
Multix retail and distribution, while still relatively small, are on plan through the first quarter. Multix is a small multi-purpose vehicle for the Indian market.
Ranger production will begin in the second quarter at the new Huntsville, AL plant, which should provide significantly better operating efficiencies and better inventory and retail flow management.
Management expects Global Adjacent Markets to be up in the high single digits percent range, reflecting the recent acquisition of Taylor-Dunn and ORV/Snowmobile sales to be down low to mid single digits.

Learn more: Seekingalpha.com (earnings call transcript)

Arctic Cat FY 2016 Q3 Results

Posted on February 10, 2016 by Marc Cesare

The new 2017 Prowler 500 from Arctic Cat begins shipping this month.

The new Arctic Cat HDX 700 Crew XT for model year 2017 also ships this month.

Arctic Cat recently reported their financial results for the fiscal year 2016 third quarter. For the quarter net sales declined 14.3%, in part driven by currency headwinds and the timing of vehicle shipments compared to the prior year’s third quarter.

The following are highlights of the earnings call as it relates to the UTV/side-by-side market.

Sales of ATVs and ROV side-by-sides decreased 28.5% to $60 million from $83.9 million in the year ago quarter, in part driven by shipment timing
Softening of the overall ATV/ROV(side-by-side) retail market is a contributing factor in management’s lowering of fiscal year 2016 guidance
Management continues to emphasize improving their dealer network with additional training, marketing programs and performance metrics
Arctic Cat is planning to add 75 dealers in the next 12 months after adding 10 in the last three months
This month the company begins shipment of their new 2017 HDX 700 Crew and Prowler 500
Compared to the prior year third quarter, total ATV, ROV unit retail sales in the fiscal 2016 third quarter rose mid-single-digits versus an industry that was flat to slightly down
Management has decided to create a world-class research and development center in St. Cloud, and one focus will be to improve their engine technology
Management admitted that Wildcat vehicle sales have been hurt by their comparatively lower horsepower but that the 2017 models will “correct” that problem

Learn more: Seekingalpha.com (Earnings call transcript)

Polaris Q4 2015 Results Point To Slowing UTV Market

Posted on February 10, 2016 by Marc Cesare

The base model General 1000 EPS is Indy Red with an MSRP of $15,999.

Despite a good start for the new General crossover utility vehicle, Polaris had a tough fourth quarter in 2015 as the UTV/side-by-side market showed weakness.

Polaris reported their worst year-over-year quarterly performance since 2009 with their recent Q4 2015 results. Fourth quarter sales were down 13% to $1.1 billion with net income of $110.7 million, down 18% as all businesses except Indian motorcycles and Slingshot fell short of expectations. Management expects a slowdown in the UTV/side-by-side market faces tough macroeconomic conditions in North American and abroad, as well as currency headwinds. The following are highlights of the earnings call as they relate to the UTV/side-by-side market.

Despite solid demand for the new GENERAL and improving interest in the RZR Turbo, Polaris lost side by side market share in the fourth quarter.
To keep dealer inventory low the company cut shipments of higher margin RZRs and Rangers.
Off-road vehicle dealer inventory including ATVs was down year-over-year for the first time in six years
Side-by-side dealer inventory was up slightly for the year
Management reported a “more cautious” consumer in the ORV channel
Polaris side-by-side revenue for 2015 grew “modestly”
4th quarter side-by-side retail sales in North America declined mid-single digits as the industry grew slightly
The new GENERAL vehicles began shipping in December, and initial consumer and dealer response was positive
ORV sales in oil producing states declined 10% while other areas of the market increased mid-single digits
For the full year 2015, Polaris again grew side-by-side market share.
Side-by-side retail sales increased mid-single digits in a side-by-side industry that grew slightly slower
Camp RZR in Glamis, California had an all-time record attendance, over 17,000 strong, which was up 45%
Q4 North American work and transportation revenue decreased low 20s percent as difficult comparables included the Ariens partners launch
GEM sales declined due to the transition to a completely redesigned GEM product platform during the quarter
Initial GEM orders are solid and a strong 2016 is expected
Q4 European Work and Transportation revenue declined low single-digits percent due primarily to currency weakness and some softness in Goupil and Mega
Aixam sales grew high single digits and the European quadricycle industry grew in both fourth quarter and for full year 2015, up low single-digits with Aixam retail up slightly more increasing their leading market share
Vehicles sales in Q4 and 2015 to Department of Defense and GSA related accounts were hurt by stop gap funding measures, but 2016 backlog is “healthy”
The European ORV industry grew mid-single digits in the fourth quarter and for the year.
Polaris gained share in the fourth quarter, as retail was up mid-teens percent and for the full year retail increased mid-single digits.
Multix, the three-in-one personal transportation vehicle from the Polaris-Eicher joint venture in India is retailing vehicles.
Multix customers are satisfied although currently the retail ramp remains well below management expectations, but they expect to accelerate retail in 2016 with key product improvements and further distribution expansion.
Huntsville plant will start production in Q2 and will initially produce RANGER side-by-sides
Huntsville incorporates the company’s most advanced Lean flow and state of the art manufacturing technologies and improves throughput times by approximately 80% compared to existing facilities
Management expects continued macroeconomic headwinds with ongoing currency issues overseas, a slight slowdown in global economies and a low growth economy in North America
Total company sales are expected to be in the range of down 2% to up 3%
ORV market share is expected to be maintained while gains are expected in global adjacent markets
ORV/snowmobiles revenue is anticipated to be flat to down mid-single digits and global adjacent markets up mid-single digits
Management continues to forecast strong competition in the side-by-side market
Q1 for 2016 side-by-side revenues is expected to be down because of Canadian currency issues, a weaker retail environment and tough prior comparables

Learn more: Seekingalpha.com (Earnings call transcript)

BRP Reports Fiscal Year 2016 Third-Quarter Results

Posted on December 15, 2015 by Marc Cesare

Introduction of the new Can-Am Defender utility side-by-side line was a third quarter highlight.

BRP, manufacturer of Can-Am side-by-sides, recently announced their fiscal year 2016 third-quarter (ending Oct. 31, 2015) results. Financial highlights in Canadian dollars include:

Revenues of $1,010.2 million, a 10.0% increase compared to the third quarter of FY2015;
Normalized EBITDA of $141.5, a 5.5% increase compared to the same period last year;
Net income of $65.5 million, an increase of $28.3 million compared to the same period last year;
Normalized net income of $72.8 million resulting in a normalized diluted earnings per share of $0.62;
Guidance remains unchanged for the full fiscal year

A summary of highlights from the earnings call that relate to the side-by-side market include:

BRP is tracking to reach the objective of signing 75 to 85 new dealers for the year
Launched the Can-Am Defender side-by-side vehicle in the largest segment of the off-road vehicle market
Defender has been well received by side-by-side, farm and hunting media
First Defender units shipped in November and full production should be reached by end of February
Season to date side-by-side market is up mid-single digits while Can-Am is down mid-single digit driven by soft start to season, but US retail was up mid-single digits in September and October
Western Canada market is weak from the impact of low oil prices
Competition in the side-by-side market is higher driven by numerous new model introductions
Management expects industry growth in the utility segment for side-by-sides to be mid-single digits in the near future.

Learn more: phx-corporate-ir.net (PDF – Earnings Call Transcript)

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Category Archives: Management

Arctic Cat Reports Q2 2017 Results

Polaris Announces Q3 2016 Results

Arctic Cat Reports Q1 2017 Results

Polaris Reports 2016 2nd Quarter Earnings

Kawasaki Recalls 28,000 Mule UTVs

BRP Reports Quarterly Results: FY2017 Q1

Polaris Reports Q1 2016 Earnings

Arctic Cat FY 2016 Q3 Results

BRP Reports Fiscal Year 2016 Third-Quarter Results