 djoles@startribune Pennington County is an island of growth in a sea of economic contraction in northwest Minnesota. Since 2000, job growth in the county has quadrupled population growth, making it an anomaly both statewide and in the northwest p](https://arc.stimg.co/startribunemedia/BEZJNTJGKK5FPRLEYR25HA56B4.jpg?&w=1080)
Strong snowmobile sales pushed up Arctic Cat Inc.'s sales a hearty 19 percent in its first fiscal quarter, but profits were dragged down by the Canadian dollar and other factors. "Higher sales were not enough to overcome the unfavorable Canadian currency," said Christopher Twomey, who returned as Arctic Cat's interim CEO last month after the exit of Claude Jordan in May.
The Canadian dollar has lost about 5 percent of its value against the U.S. dollar over the past year. That has forced shoppers using Canadian dollars to spend more for U.S. products, U.S. producers to lower prices in Canada or a combination of the two. Arctic Cat gets about 30 percent of its sales in Canada.
Meanwhile, the Plymouth-based company's latest results also included a $1.5 million one-time charge for Jordan's severance.
The company's gross profit margin fell to 21 percent from 24 percent a year ago as its product mix shifted. Sales of lower-margin snowmobiles rose while higher-margin all-terrain vehicles fell.
The company shipped more snowmobiles in the quarter under contract manufacturing partnerships to firms including Yamaha and Suzuki, deals that yield lower margins than when snowmobiles are sold solely under its own brand. Meanwhile, executives attributed the ATV decline to efforts to lower dealer inventories in advance of the September introduction of 14 new models.
Going forward, Twomey said, Arctic Cat will focus on product introductions and on efficiency and cost-cutting efforts. It recently introduced its Wildcat Trail side-by-side vehicle, which helped retail sales in the April-June period.
The company estimates sales of side-by-side ATVs should rise 6 to 9 percent this year while snowmobile and regular ATVs sales could be flat to 3 percent higher.
Total revenues for the latest quarter rose 19 percent to $143.6 million. Earnings were $3.6 million, or 27 cents a share, down from $5.5 million, or 40 cents a share, a year ago. Excluding the severance charge of 8 cents a share, earnings would have been 35 cents a share, which was 3 cents better than analysts expected.
