Arctic Cat Inc (NASDAQ:ACAT) Q3 2015 Earnings Conference Call - Final Transcript

Jan 28, 2015 • 11:00 am ET


Arctic Cat Inc (NASDAQ:ACAT) Q3 2015 Earnings Conference Call - Final Transcript


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Good day, and welcome to Arctic Cat's Fiscal 2015 Third Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Shawn Brumbaugh. Please go ahead.

Shawn Brumbaugh

Thank you (inaudible) and thank you for joining us this morning. I'm Shawn Brumbaugh with PadillaCRT. Before the market opened this morning, Arctic Cat released results for its fiscal 2015 third quarter ended December 31, 2014. Participating in our call today to discuss the company's performance and outlook will be President and CEO, Christopher Metz, also joining us today Randy Pederson, one of Arctic Cat's Senior Finance Leaders and a 25-year (inaudible) on the company. Following their remarks, we will have time for questions.

(Forward-Looking Cautionary Statements) Now, I'll turn the call over to Arctic Cat's CEO, Chris Metz. Chris?

Christopher Metz

Thank you, Shawn, and thanks for all of you for joining us this morning. Let me begin by saying that, I'm very pleased to be here today. Since I joined Arctic Cat as CEO in December, I've learned a great deal about the company, its many strengths, opportunities and challenges. I was initially attracted by the company because of leverages in my background, my skill set and my passion for the outdoors. My short time here has reinforced my belief that Arctic Cat is an iconic brand in a growing industry with significant potential to improve its top and bottom-line results.

The company's third quarter results demonstrate this. As you saw in the earnings release, there are areas where we are performing very well and others that need improvement. One of my priorities has been to determine, what's working and where we should focus attention? At this very early stage of my tenure, we are in the process of developing our strategic growth plans. I will share these plans with you soon as possible. For now though, I can say with confidence that we are seeking to spur growth through better deal of development, additional OEM partnerships and small bolt-on acquisitions that will enable us to grow quickly and expand our expertise and capabilities and drive even faster product innovation.

As an example of this, Arctic Cat signed an OEM agreement with the company during the third quarter to build private label side-by-side vehicles for the Commercial lawn equipment business. We are pleased to partner with another high-quality consumer brand. We expect to begin shipping products to this customer in March. While, we do not expect initial sales to be material to Arctic Cat's results in fiscal 2015. This is an example of how we are seeking to leverage our manufacturing scale and capabilities in order to increase sales and operating profit. We are excited about this new growth avenue.

Now let me provide an overview of the third quarter results, starting with the ATV business. Sales of Arctic Cat's ATVs and side-by-side ROVs grew 7% in the 2015 third quarter. Contributing to sales was growth in Wildcat ROVs, which continue to perform very well for