Polaris has reported their 4Q and 2018 full year fiscals, with adjusted sales for the fourth quarter of 2018 increased by +14% to $1,627 million. Fourth quarter reported net income was $1.47 per diluted share, up 200% over the prior year; adjusted net income for the same period was $1.83 per diluted share, up +19% over the prior year.
Full year 2018 reported net income was $5.24 per diluted share, up +95%; adjusted net income for the same period was $6.56 per diluted share, up +29%, which was near the high-end of previously issued guidance.
Reported and adjusted sales for the full year of 2018 increased +12% to $6,079 million and $6,083 million, respectively. North American retail sales increased +6% for the quarter compared to last year; ORV North American retail sales were up low single digits, driven by side-by-side vehicle sales.
Dealer inventory was up +1% year-over-year for the fourth quarter 2018, in line with expectations. Polaris announced full year 2018 adjusted sales and earnings guidance with full year adjusted sales growth in the range of +11% to +13% over the prior year and full year adjusted earnings in the range of $6.00 to $6.25 per diluted share, which includes the combined negative impact from external factors - including the annualized impact of current tariffs, adverse foreign exchange impact and higher interest rates of approximately $1.50 per share.
Motorcycle segment sales, including PG&A, totaled $87 million, down 15 percent compared to the fourth quarter of 2017. Indian sales increased slightly, but were more than offset by the decline in Slingshot sales.
North American consumer retail sales for the Polaris motorcycle segment, including both Indian Motorcycle and Slingshot, decreased high-teens during the 2018 fourth quarter. Indian Motorcycle retail sales decreased low double-digits, but their ‘middleweight’ models were up by low single digits.
Slingshot's retail sales were down substantially during the quarter. Motorcycle industry retail sales, 900 cc and above, were down low double-digits percent in the 2018 fourth quarter. Indian Motorcycle gained market share for the 2018 fourth quarter on a year-over-year basis.
Gross motorcycle segment profit for the fourth quarter of 2018 was $2 million compared to $5 million in the fourth quarter of 2017. Adjusted for the Victory wind-down costs for both 2018 and 2017 fourth quarters, motorcycle gross profit was $2 million in the 2018 fourth quarter compared to $8 million for the 2017 fourth quarter. The decrease in gross profit was the result of negative product mix, along with tariff costs and higher logistics and commodity costs.
Scott Wine, Chairman and Chief Executive Officer of Polaris Industries Inc., said that "our strong performance during 2018 demonstrated the dedication and flexibility of our global team as they drove improved financial and operating results for the year while adapting and executing our strategy to account for tariffs and other external pressures.
“Between sales growth in almost all of our segments, improved operational efficiencies and a lower tax rate, we more than offset macroeconomic and tariff headwinds, generating a +29 percent increase in earnings per share. Growth and market share gains in Off Road Vehicles, and the acquisition of Boat Holdings, further expanded our position as the global leader in powersports and established Polaris as a leader in the attractive, profitable and growing pontoon market.
“We are encouraged by our growth prospects for 2019 and beyond, but keenly aware of, and prepared for, the challenges and uncertainties presented by global trade and economic complications. We are doubling down on our commitment to be a customer-centric, highly efficient growth company, directing our investments and actions towards organic growth and productivity. Our devotion to safety and quality is never ending and provides the solid foundation for our future of innovation and profitable growth. We expect to demonstrate that in the year ahead with further market share gains in both ORV and motorcycles as we continue to advance our leadership position in Powersports.”