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Arctic Cat also reports it has returned to full year profitability, despite lower overall sales. The upbeat fourth quarter financials included a 118% increase in snowmobile sales in the final quarter, which ended March 31.
The Thief River Falls, Minn.-based power sports company reported a $1.9 million profit for the year after posting a $9.5 million loss the previous fiscal year as it cut its operating costs and costs of goods produced.
"Arctic Cat is better positioned today for long-term growth when the retail powersports market recovers," said Christopher Twomey, Arctic Cat's chairman and chief executive officer.
To support that, Cat cites that its inventories declined 33% to $81.4 million from $120.8 million at the end of the fourth quarter. That reduction helped Cat's cash position rise to $71.1 million up from $11.4 million in 2009, Twomey said during a conference call.
Likewise the company's expenses for research and development were cut to $12.9 million from $18.4 million in 2009. However, Twomey noted there still were significant R&D projects going on in both snowmobile and ATVs, and the firm expects that investment to show up as profits when the 2012 models hit the dealers.
Overall, Cat's sales were down in fiscal 2010 due to lower demand throughout its markets. For the year sales dropped 20% to $450.7 million vs. $563.6 million in 2009. Fourth quarter sales were $84 million vs. $90.7 million in the previous year's quarter.
Snowmobile sales improved in the fourth quarter, increasing to $597,000. The prior year's fourth quarter sales were negative $3.4 million due to major sales incentives. Full-year snowmobile sales were $162.9 million vs. $207.3 million last year, a 21% decrease. Cat had some good news though as it reported that its 2010 M8 mountain snowmobile was the best selling sled in its class in the U.S. market.
The overall snowmobile sales decline was attributed to lower snowfalls in Canada and international sales being hurt by weak European economies. Cat forecasts snowmobile sales to be in a range that is either up or down about 5% in the upcoming year.