Despite another quarter of declining profits, Arctic Cat Inc.’s new CEO said Wednesday that the struggling manufacturer will take “bold actions” to return to growth, including $27 million in upgrades to its Thief River Falls and St. Cloud plants.
CEO Christopher Metz told analysts in a conference call that he is undeterred by the fourth-quarter loss reported Wednesday. He said Arctic Cat is working hard to grow again and improve dealer inventories and marketing.
“We are committed to positioning the company for long-term, profitable growth,” Metz said. “In addition, we are focused on investing in our business, speeding organizational change and improving efficiency.”
The Plymouth-based company said it will spend about $26 million to add a new state-of-the-art paint line and make other facility improvements to the Thief River Falls plant that would create 39 jobs. In St. Cloud, the company will add 10 jobs after expanding its engine manufacturing division.
“We are excited to strengthen our Minnesota manufacturing footprint,” said Metz, thanking local and state officials for support.
The company had asked city and Pennington County for property tax abatements for the 70,000-square-foot expansion in Thief River Falls.
The company’s quarterly loss came amid plunging sales of all-terrain vehicles, slower sales of snowmobiles and vehicle parts and planned inventory reductions.
Results also were affected by the company’s executive transition costs associated with assembling a new management team. In addition, like many other U.S. manufacturers, Arctic Cat suffered from unfavorable currency translation rates as the U.S. dollar remains quite high. The company, which sells a third of its products in Canada, saw currency woes snip profits by $6.9 million in the quarter.
Arctic Cat had a net loss of $21.5 million, or $1.66 a share, for its fiscal fourth quarter; in the same period a year ago, the company reported a net loss of $1.5 million, or 12 cents a share. Revenue dropped 32 percent to $99 million.
When adjusted for one-time costs, Arctic Cat’s fourth-quarter loss was $1.15 a share. Analysts had forecast a loss of $1.17.
Nevertheless, the company’s stock price fell 7 percent Wednesday to close at $32.50 per share.
For the full fiscal 2015, Arctic Cat reported a slight profit of $4.9 million, or 38 cents a share, down from 2014’s $39.4 million, or $2.90 a share. Revenue dropped 4.3 percent to $699 million.