Arctic Cat shows new strength

Snowfall in Minnesota may be weeks away, but at Waconia Farm Supply, buyers have been ordering Arctic Cat Inc. snowmobiles since last spring.

"We had one of the strongest preselling seasons for snowmobiles in several years," said Dean Meyer, sales manager of the Arctic Cat dealership about 35 miles west of the Twin Cities. The interest has continued this fall.

Meyer attributed the robust sales to the large number of new snowmobile models this year, including a wider range of lighter-weight vehicles with four-stroke engines, and pent-up consumer demand.

"People have been hanging tight to their wallets for the last few years," said Meyer. "They've been waiting for changes in models. Now they're seeing them, and they're ready to spend."

On Thursday, Arctic Cat credited new products -- mostly snowmobiles -- for much of its strong sales and earnings gains in its second quarter and its improved forecast for this year. Wall Street responded by sending the company's shares up almost 20 percent to a 12-month high of $20.76.

The Plymouth-based maker of snowmobiles and all-terrain vehicles reported a 17 percent increase in revenue to $204.8 million. Earnings for the quarter ended Sept. 30 totaled $21.4 million or $1.15 per share, up from 97 cents per share a year ago, and 7 cents higher than stock analysts' average per-share estimate.

"The company remains well-positioned for future sales growth across all product lines," said CEO Claude Jordan in a conference call.

Surging snowmobile sales led the way in the second quarter, climbing 25 percent to $114.7 million. The gains were powered by Arctic Cat's lineup of 23 new models for 2012 that account for three-fourths of the company's snowmobile offerings.

Jordan said the company expects its snowmobiles sales to increase 28 percent to 33 percent this year. That's better than the range forecast earlier this year by the company and considerably better than projections of 5 percent to 10 percent growth for the industry as a whole.

All-terrain vehicle revenue stood at $58.8 million, up 4 percent over a year ago, an increase primarily driven by international sales and sales of side-by-side models, which allow a passenger to sit next to the driver. Jordan said early demand has been strong for the Wildcat, Arctic's first pure-sport side-by-side vehicle. The company will begin shipping the new vehicle in the third quarter.

Waconia Farm Supply won't start carrying the Wildcat until January, but Meyer said he already has received inquiries from interested buyers, some as far away as Arizona. He said other customers closer to home have told him they want to buy the Wildcat so they can take it along on vacations in the Southwest.

Arctic Cat's Minnesota-based rival, Polaris Industries Inc., has surged to the head of the pack in the off-road vehicle market because of its strong side-by-side business, including its pure sport model, the RZR. Until now Arctic Cat has only had the Prowler side-by-side model used mostly by farmers and workers.

Staff writer Mike Hughlett contributed to this report. Susan Feyder • 612-673-1723

Revenue$279.8$239.2+16.9 Income19.113.3+43.2 Earn/share1.020.72+41.7Figures in millions except for earnings per share.