Textron on Wednesday seemingly hung the “For Sale” sign on its Arctic Cat division when it filed a Form 8-K report with the Securities & Exchange Commission.
In the filing, Textron said is is “Pursuing strategic alternatives for its powersports product line within the Industrial segment’s Textron Specialized Vehicles (TSV) business.
“The consumer end market demand for powersports products continues to remain soft,” the filing continued. “As a result, and in conjunction with its annual operating plan process, TSV has begun to pause production of its powersports products as Textron’s management reviews strategic alternatives for the business. Upon completion of limited production runs to satisfy customer commitments, production of TSV’s powersports products will be paused indefinitely in the first half of 2025.”
The extended halt on production follows an earlier announcement of a production stop until the first quarter of 2025.
A “strategic alternative” could most certainly include selling the division to an interested third party. For months, chatter online and among industry insiders has focused on brands like Argo, CF Moto, John Deere, Yamaha and many others who in theory could be interested in Arctic Cat – both for its current products and for its U.S.-based manufacturing facilities in Thief River Falls and St. Cloud, Minnesota.
At this point, though, all of those names of potential suitors for Arctic Cat have been dropped purely as speculation, with few if any hard facts behind any of it.
UPDATE: Official Statement From Textron
We reached out to Brandon Haddock at Textron, and he relayed the following official announcement:
“In response to the ongoing business conditions facing the powersports industry, Arctic Cat will suspend manufacturing operations indefinitely at our facilities in Thief River Falls and St. Cloud, Minnesota, after planned production in the first half of 2025 is complete.
“Textron Inc. also announced that it is exploring strategic alternatives regarding the future of the powersports business. These actions are difficult but necessary as we have continued to experience softness in consumer end-market demand, resulting in a need to reduce costs.
“Arctic Cat remains open for business with respect to selling current inventory and providing aftermarket support and services to our existing installed customer base. Our sales organization, customer service teams, aftermarket distribution centers, and other functions are ready to assist our dealers and loyal customers. We are committed to providing the service and support to keep our thousands of loyal customers riding and enjoying Arctic Cat vehicles.
“We will resume production as planned after the new year to produce units under existing customer commitments. However, once that build is completed, we will suspend operations indefinitely, and will release our manufacturing employees at the Thief River Falls and St. Cloud facilities. Employees who work through their specific completion date will be offered severance benefits.
“We will monitor industry conditions throughout this suspension, and make further announcements about our operational plans when we have more information to share.
“We thank our employees, dealers, customers and supporters for their loyalty, patience and understanding as we weather the difficult conditions facing our business and our industry.”
Arctic Cat SEC Announcement
The rest of the Textron announcement today focused on the short-term financial impact of the move – which is what most filings with the Securities and Exchange Commission typically do.
The filing reads: “As a result of these developments, on December 18, 2024, Textron management approved additional actions at the Industrial segment under Textron’s 2023 restructuring plan. Total pretax special charges related to the 2023 restructuring plan are now expected to increase from the previously announced range of $165 million to $170 million to a range of $190 million to $205 million.
“The increased charges of $25 million to $35 million are related to contract termination costs associated with the powersports production pause. These charges will be recorded in the fourth quarter of 2024, with additional cash outlays of $25 million to $35 million expected primarily in the first half of 2025. We expect the plan to be substantially completed in the first half of 2025. In addition, due to the indefinite production pause, the Company expects to incur an inventory valuation charge in the range of $30 million to $40 million to write down production-related powersports inventory to its net realizable value. Item 7.01 Regulation FD Disclosure The inventory valuation charge discussed above is expected to reduce Adjusted earnings per share for 2024 by approximately $0.12 to $0.16.”
