Arctic Cat reports third-quarter profits
THIEF RIVER FALLS -- Thief River Falls-based Arctic Cat reported good profits in its fiscal year's third quarter, which ended Dec. 31, despite lower sales figures, because of sharp cost-cutting, including fewer workers, company officials announced Wednesday.
Third-quarter net earnings were $2.6 million on net sales of $131 million, up from net earnings in last year's third-quarter net loss of $2.7 million on net sales of $174 million.
In the first nine months of its 2010 fiscal year, Arctic Cat has made net earnings of $11.4 million, compared with the previous year's $7.2 million in net earnings for the same period. But net sales this fiscal year, so far, have totaled only $366.7 million, compared with $472.9 million the same period a year ago.
Chairman and CEO Chris Twomey said during a conference call, "We are pleased with the company's further progress in delivering improved operating results during the third quarter and year to date, particularly giving the continued difficult selling conditions in the power sports market. Our focus on lowering Arctic Cat's cost structure through lean manufacturing efficiencies, low-cost sourcing and expense controls led to higher gross margins and operating profits. In addition, our efforts to reduce inventories resulted in a much stronger balance sheet."
Twomey told the Star Tribune of Minneapolis that part of the cost-cutting came in reducing the number of employees -- about 14 percent to a peak of about 1,200, from a peak of about 1,400 in fiscal year 2009 that ended last March 31.
Current employment levels apparently are closer to 1,100, though.
In May, the company announced it would cut 60 positions, or 5 percent of its then-current work force of 1,200.
Last January, the company cut 100 employees, trimmed benefits and production and executives took a 5 percent pay cut.
Sales of snowmobiles and all-terrain vehicles were down the past quarter and past nine months compared with the previous year's same periods, Twomey said.
Operating expenses are down 14 percent and inventories down 29 percent in the first nine months of the fiscal year, he said.
He said the company gained market share in snowmobiles last quarter.