Polaris Q2 - Over 50% On Road Retail Sales Increase Drives +14% Overall Powersports Growth
Polaris Industries has reported financial and operational highlights for the second quarter of 2023, including sales of $2,217m, up 7% compared to last year.
The primary sales drivers were said to be "favorable ship volumes, product mix and net pricing partially offset by higher finance interest."
Polaris reports market share gains in Off Road, On Road and Marine segments with overall powersports retail sales for the quarter up 14% versus last year - driven by a more than 50% increase in On Road, as well as double-digit percentage growth in Off Road.
North America unit retail sales for Indian Motorcycle were up over 40%. "North America unit retail sales for the comparable motorcycle industry were up low-single digits percent."
However, On-Road PG&A sales decreased 12%, with the benefits of the unit sales volume increase partially offset by higher finance interest. The achieved gross profit margin performance (22.8%) was driven by favorable product mix, lower logistics costs and higher volumes.
Polaris CEO Mike Speetzen is quoted as saying: "The Polaris team continued to execute on our 2023 plans with this quarter's performance being a strong reflection of our ongoing focus and dedication.
"Improved demand and industry-leading products drove retail growth across our Off Road and On Road segments in the quarter, including a 50% increase in On Road retail sales compared to the prior year.
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| Internationally, Indian Motorcycles continues to build momentum. The recent Indian Riders Fest in the Czech Republic (June 2023) saw of thousands of Indian enthusiasts riding from more than 20 different countries for what is believed to have been the first ever (and certainly the largest ever) independent Indian motorcycle enthusiasts rally in the world. |
"Marine sales declined amidst a softer pontoon industry, but the team worked hard to gain modest share in the quarter. We are raising our full-year sales guidance given the strong performance in the first half of the year in Off Road, which is somewhat offset by a decrease in our Marine guidance, given a weaker outlook on the industry."
Of the reported worldwide sales of $2,217m (up 7% versus the second quarter of 2022, North America sales of $1,883m represented 85% of total company sales and an 8% increase from $1,748m in 2022. International sales of $333m represented 15% of total company sales and increased 6% versus the second quarter of 2022.
"Total company sales growth in the second quarter of 2023 was driven by higher shipment volumes, primarily driven by Off Road and Indian Motorcycle, as well as favorable net pricing."
Gross profit margin decreased 22 basis points to 22.8% for the second quarter. Adjusted gross profit margin (also 22.8%) decreased 21 basis points "primarily driven by higher finance interest and warranty costs, as well as foreign exchange headwinds, partially offset by favorable net pricing."
Operating expenses were $330m in the second quarter of 2023 compared to $292m in the second quarter of 2022 due to higher marketing, general and administrative expenses, as well as higher R&D expenses. Operating expenses, as a percentage of sales, of 14.9% were up 74 basis points in the second quarter of 2023 compared to the second quarter of 2022.
Off Road segment results were also primarily driven by higher volume partially offset by higher finance interest. However, Off Road PG&A sales increased by 17%. Polaris North America ORV unit retail sales were up 14%. Estimated North America industry ORV unit retail sales were up high-single digits percent.
Marine segment sales results were primarily driven by softer demand and unfavorable product mix, partially offset by positive net pricing.
Second quarter reported diluted earnings per share from continuing operations was $2.32, down 1% versus last year; adjusted diluted earnings per share from continuing operations was $2.42, flat versus last year. Second quarter net income from continuing operations attributable to Polaris of $134m decreased five percent.
Polaris has upgraded its 2023 sales outlook by 3% to 6% versus its previous outlook of flat to up 5% versus 2022.
