Polaris has reported increased Q4 2019 sales of $1,736 million (+7%), with +12% for the full year 2019 at $6,783 million, confirming its position ahead of Harley-Davidson in total turnover terms.
Although Polaris is a much broader based powersports industry business compared to Harley's reliance solely on motorcycles, the two 'have form' where total revenue rivalry is concerned - Harley having been 'sniffy' about its Minneapolis based proto-rival 'back-in-the-day' when H-D sales from motorcycles alone were larger than Polaris' total sales revenues.
North American retail sales increased +2% for the quarter compared to 2018; North American ORV retail sales were up low-single digits percent; Indian Motorcycle retail sales were up low-single digits percent.
"We ended the year with positive fourth quarter retail momentum in both Off-Road Vehicles and Motorcycles, supporting strong full year, with broad-based sales growth of 12 percent," stated CEO Scott Wine.
"While TAP grew modestly in the fourth quarter, non-TAP Parts, Garments and Accessories (PG&A) and aftermarket sales stole the show - eclipsing $1 billion for the first time in 2019. Our recent leadership changes were made to spur both tactical and strategic growth, and the +37% increase in Indian Motorcycle sales in the fourth quarter, driven largely by the Indian Challenger, demonstrates what is possible as Mike Dougherty takes over that important segment.
'Polaris Q4 sales +7%'
"Steve Menneto is aggressively moving to accelerate retail performance in Off-Road Vehicles and Snowmobiles, building off a strong year of financial performance in our largest business. In 2019, we delivered strong operational performance across Polaris, especially productivity and delivery, and we expect further gains to create value for customers and shareholders in the year ahead.
"Our commitment to being a customer-centric, highly profitable growth company is unwavering, and I am extremely confident in this Polaris team to deliver on that promise."
Motorcycles segment sales, including PG&A, totaled $119 million, up +37% compared to the fourth quarter of 2018, led by strong sales of Indian motorcycles. Slingshot reported a sales decline during the quarter. Gross Motorcycles segment profit for the fourth quarter of 2019 was negative $2 million - primarily due to increased promotions and higher warranty costs.
North American consumer retail sales for Indian motorcycles increased low-single digits percent during the fourth quarter of 2019 in a weak mid to heavyweight two-wheel motorcycle industry that was down high-single digits percent.
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| CEO Scott Wine: "We ended the year with positive fourth quarter retail momentum in both Off-Road Vehicles and Motorcycles, supporting strong full year, with broad-based sales growth of 12 percent." |
North American consumer retail sales for Polaris' motorcycle segment, including both Indian Motorcycles and Slingshot, decreased low-single digits percent during the fourth quarter of 2019, while the North American motorcycle industry retail sales for mid to heavyweight motorcycles, including three-wheel vehicles, was down mid-single digits percent in the fourth quarter of 2019.
Off-Road Vehicles (“ORV”) and Snowmobiles segment sales, including PG&A, totaled $1,140 million (+7%) for the fourth quarter of 2019, driven by growth in side-by-side sales. PG&A sales for ORV and Snowmobiles combined increased +7% in the fourth quarter of 2019. Gross profit increased +12% to $315 million in the fourth quarter of 2019; gross profit percentage increased 103 basis points during the 2019 fourth quarter due to favorable product mix.
ORV wholegood sales for the fourth quarter of 2019 increased +13%, primarily driven by positive mix. Polaris North American ORV retail sales were up low-single digits percent for the quarter, with side-by-side vehicles up low-single digits percent and ATV vehicles up mid-single digits percent. The North American ORV industry was up mid-single digits percent compared to the fourth quarter last year.
Snowmobile wholegood sales in the fourth quarter of 2019 were down -10%, pressured by a challenging comparable in the prior year period due to the timing of pre-season SnowCheck order shipments.
'Larger than H-D at $6.7 bn, +12% for 2019 full year'
Global Adjacent Markets segment sales, including PG&A, decreased by -1.0% to $120 million in the 2019 fourth quarter primarily due to lower sales in the commercial, government and defense business. Gross profit increased +6% to $35 million or 29.1% of sales in the fourth quarter of 2019 due to improved operational efficiency.
Aftermarket segment sales of $221 million in the 2019 fourth quarter increased +4%; Transamerican Auto Parts (TAP) sales of $185 million in the fourth quarter of 2019 increased +1%; the company's other aftermarket brands increased sales by +22%. Gross profit decreased to $49 million in the fourth quarter of 2019 due to higher tariff costs.
Boats segment sales decreased -7% to $135 million in the 2019 fourth quarter primarily due to negative product mix and planned dealer inventory reductions. Gross profit decreased -1.0% to $26 million or 19.0% of sales in the fourth quarter of 2019.
The company reported fourth quarter 2019 net income of $99 million, or $1.58 per diluted share. Off-Road Vehicles (“ORV”) and Snowmobiles segment sales, including PG&A, totaled $1,140 million for the fourth quarter of 2019, up +7%, driven by growth in side-by-side sales. PG&A sales for ORV and Snowmobiles combined +7% in the fourth quarter of 2019. Gross profit increased +12% to $315 million in the fourth quarter of 2019. Gross profit percentage increased 103 basis points during the 2019 fourth quarter due to favorable product mix.
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| Like Harley, Indian is launching mid-cycle 2020 model range additions - this is the new and returning Ride Command System equipped Roadmaster Elite. With a limited production of 225 motorcycles, highlights to this year’s "meaner, sportier iteration" are the inclusion of a new Thunder Black Vivid Crystal over Gunmetal Flake paint job, an upgraded 600 watt PowerBand Audio Plus system, along with Indian’s most powerful air-cooled engine - the Thunder Stroke 116 featuring "a class-leading performance" with 126 ft-lbs of torque. |
Adjusted net income for the quarter ended December 31, 2019 was $115 million, or $1.83 per diluted share compared to $113 million, or $1.83 per diluted share in the 2018 fourth quarter.
Gross profit increased +8% to $423 million for the fourth quarter of 2019 from $391 million in the fourth quarter of 2018. Reported gross profit margin was 24.4% of sales for the fourth quarter of 2019, up 34 basis points compared to +24.0% of sales for the fourth quarter of 2018.
Operating expenses increased +13% for the fourth quarter of 2019 to $308 million, or 17.7% of sales, from $272 million, or 16.7% of sales, in the same period in 2018. Operating expenses in dollars and as a percent of sales increased primarily due to ongoing investment in research and development and strategic projects.
For 2020 the company says sales are expected to increase in the range of 2 to 4% over 2019, with net income expected to be in the range of $6.80 to $7.05 per diluted share for the full year. "While the negative impact of tariffs remains a significant headwind on an annualized basis, the year-over-year impact is expected to be minimal to the company’s 2020 full year earnings guidance."