topbanner ad

Monday 31 October 2016

Polaris

Polaris say Q3 2016 Victory and Indian unit sales up by “high single digits percent” in a down market

Polaris Industries say that North American consumer retail demand for Victory and Indian models increased high single digits percent during the 2016 third quarter, with Indian Motorcycle and Victory increasing low-teens percent combined, while overall motorcycle industry retail sales 900cc and above were down high single digits percent in the 2016 third quarter. 


Product availability for all three motorcycle brands remained “adequate” throughout the quarter with both the Company’s Spirit Lake, Iowa motorcycle plant and the new Slingshot production line in Huntsville, Alabama, producing at retail demand levels.
However, the company reported third Motorcycle segment sales revenues, including its respective PG&A sales, down by -3 percent in the 2016 third quarter to $183.2 million. Victory and Indian Motorcycle reported increased vehicle sales revenue growth, while Slingshot sales revenue was down during the quarter due to shipment timing.
Gross profit in the Motorcycle segment decreased by -26 percent to $21.2 million, or 11.6 percent of sales in the third quarter of 2016, compared to $28.4 million, or 15.1 percent of sales, in the third quarter of 2015 – apparently due to higher warranty expense related to recent safety and service bulletins, primarily for Slingshot.



“Our third quarter results, while discouraging, were in line with our revised guidance and reflect our ongoing execution of the RZR recalls and significant quality and safety improvement initiatives,” said Scott Wine, Polaris’ Chairman and Chief Executive Officer.
“In addition to these recall challenges, we continued to face a weak overall powersports industry, but were encouraged by continued retail strength for Indian and our overall motorcycle business, and the return to growth for side-by-sides in September,” he commented.
“We remain committed to improving our fundamentals and executing our long-term strategy to be the ‘Best in Powersports, Plus’. Our recent announcement to acquire Transamerican Auto Parts, a $740 million, vertically integrated, multi-channel leader in the $10+ billion Jeep and truck aftermarket accessory space, is consistent with our strategy and exciting due to its growth potential. “We are making the necessary investments, both internally and externally, to realize the true potential of our organization. Along with improvements in product safety and quality, we are using Huntsville and our go to market Retail Flow Management (“RFM”) process to establish Lean as a competitive advantage, we are bringing technology to the forefront of our industry with ‘Ride Command’, and we are working to transform the customer experience, from purchase to service, to enhance profitability.
“This commitment to improving our execution and our overall performance will drive a steadier cadence of growth and profitability in the future.”
Third quarter net income was $32.3 million, or $0.50 per diluted share, for the quarter ended September 30, 2016 compared to $155.2 million, or $2.30 per diluted share reported in the third quarter of 2015.
Sales for the third quarter of 2016 totaled $1,185.1 million, down -19 percent from last year’s third quarter sales of $1,456.0 million.
Compared to the $535.699 m in motorcycle segment sales revenue reported for the first nine months of the 2015 financial year, motorcycle segment sales revenues are reported up by +13 percent for the first nine months of 2016 at $602.762 m.
Total Polaris sales revenues were down by -19 percent at $ 1,185.067m for the third quarter (compared to $ 1,456.000m for the year ago quarter) and -19 percent at $ 3,298.840m for the first nine months of 2016 (compared with $ 3,613.672m for the first nine months of 2015.
Total gross profit across Polaris’ full range of activities was -37 percent for the third quarter at $ 260.770m (22 percent of sales) compared to $ 415.623 for the year ago quarter (28.5 percent of sales); and was -23 percent for the first nine months of 2016 at $ 792.851m (24 percent of sales) compared to$ 1,028.768m for the year ago period (28.5 percent of sales).
Off-Road Vehicle (“ORV”) and Snowmobile segment sales revenue, including its respective PG&A sales, decreased -23 percent from the third quarter of 2015 to $923.4 million.
Polaris’ “Global Adjacent Markets” segment sales along with its respective PG&A sales, increased six percent to $78.5 million in the 2016 third quarter compared to the 2015 third quarter.
Parts, Garments and Accessories (“PG&A”) sales, which are included in each of the three respective reporting segments, declined one percent during the 2016 third quarter to $224.4 million, driven by lower retail sales.
International sales to customers outside of North America totaled $141.0 million for the third quarter of 2016, including PG&A, a decrease of eight percent from the same period in 2015. International sales on a constant currency basis were down seven percent in the 2016 third quarter.
Operating expenses increased 16 percent to $222.6 million, or 18.8 percent of sales, for the third quarter of 2016, compared to $192.0 million, or 13.2 percent of sales, for the third quarter of 2015.
Net cash provided by operating activities was $426.2 million for the nine months ended September 30, 2016, compared to $464.0 million for the same period in 2015. Total debt for the quarter was $436.7 million. The Company’s debt-to-total capital ratio was 32 percent at September 30, 2016, compared to 25 percent a year ago. Cash and cash equivalents were $122.7 million at September 30, 2016, down from $225.3 million for the same period in 2015.
During the third quarter 2016, the Company repurchased and retired 111,000 shares of its common stock for $10.5 million. As of September 30, 2016, the Company currently has authorization from its Board of Directors to repurchase up to an additional 8.6 million shares of Polaris stock.
For the full year 2016, the Company says its Motorcycle segment unit sales are forecast to be up low-single digits percent.