Arctic Cat Inc.'s latest quarterly results came in above investors' expectations even though they were weighed down by recall costs, and the company's stock rose Thursday.
Plymouth-based Arctic Cat said the performance was shaped by higher sales of snowmobiles that it makes under contract for other brands and by sales of parts, accessories and clothes. But it lowered its sales outlook for the rest of the year, citing overstocked domestic dealers and the likelihood of lower international sales than previously expected, including to Russia.
"Our dealers have too much core ATV inventory," Christopher Twomey, chief executive, told analysts. "They did not feel comfortable ordering the number of 2015 model year ATVs that were in the company's plan."
The company said it earned $15.4 million, or $1.18 a share, in July-to-September period, the second quarter of its fiscal year. Excluding costs related to a recall of 40,000 ATVs announced Oct. 1, the company earned $1.44 a share, well above the $1.20 forecast by analysts. A year ago, it earned $23.4 million, or $1.70 a share.
Revenue was $262.5 million, up 10 percent.
Arctic Cat shares rose 1 percent.
For its full fiscal year, which ends next March, Arctic Cat said it now expects adjusted earnings of $1.89 to $1.99 a share. It lowered its revenue forecast by about $30 million to a range of $745 million to $755 million.
"This is disappointing," Twomey said. "But we believe it will better position our business for future growth and profitability."
Evan Ramstad