Polaris Reports "North America Unit Retail Sales for Indian Motorcycle Were Down High-Teens Percent"
Polaris has released its Q4 and full year 2023 results with increased sales for the full year, but reduced sales (compared to Q4 2022) for the final quarter of 2024.
Full year 2023 sales were $8,934m, up 4% compared to 2022; but fourth quarter sales were $2,289m, down 5% compared to the year-ago. The primary factors said to be affecting Q4 sales were lower volume, net pricing driven by higher promotional spend and higher finance interest.
Polaris reports Q4 share gains in Off Road with Powersports retail sales for the quarter up 7% percent versus 2022 - "driven by growth in snow and utility ORV, more than offsetting softness in On Road and Marine."
Polaris is forecasting full year 2024 sales and adjusted earnings guidance with full year sales expected to be down 5 to 7% and full year adjusted earnings per share expected to be down 10 to 15% (both compared to 2023).
On Road segment results were primarily driven by lower sales volumes, PG&A sales decreasing 4% and gross profit margin performance driven by increased warranty costs.
North America unit retail sales for Indian Motorcycle were down high-teens percent. Estimated North America unit retail sales for the comparable motorcycle industry were down low-double digits percent.
Off Road segment results were primarily driven by increased sales volume in snow, utility side-by-sides, and commercial partially offsetting continued weakness in recreation. PG&A sales increased 16%.
Gross profit margin performance was driven by lower net pricing - driven by higher promotional activity, higher finance interest and unfavorable product mix.
Polaris North America ORV unit retail sales were up 7%. Estimated North America industry ORV unit retail sales were up mid-single digits percent.
Marine segment results were primarily driven by lower sales volumes. Gross profit margin performance was impacted by the decrease in sales volumes and lower net pricing resulting in decreased leverage of manufacturing costs.
Polaris CEO Mike Speetzen is quoted as saying: "We came into 2023 confident in our industry-defining innovation and compelling product portfolios, enabling us to win the share battle across our segments within a complicated environment.
"Earnings per share performance came in below our expectations due to unexpected operational challenges, however, the team has identified and has already begun making meaningful progress on our efficiency and margin initiatives for 2024 and beyond.
"As reflected in our outlook, segments of our industry are expected to remain challenged in 2024, but we believe we will continue to capture market share with our robust lineup and new products coming later this year. The Polaris team’s relentless efforts remain focused on delivering the most innovative products in the industry, unmatched customer experiences and stronger operating fundamentals."
Performance Summary
- For the fourth quarter, the company reported worldwide sales of $2,289m, down 5% versus the fourth quarter of 2022. North America sales of $1,995m represented 87% of total company sales and decreased 5% from $2,108m in 2022. International sales of $294m represented 13% of total company sales and decreased 1% versus the fourth quarter of 2022.
- Total company sales in the fourth quarter of 2023 were negatively impacted by lower volume, net pricing driven by higher promotional activity and higher finance interest.
- As reported, fourth quarter net income from continuing operations attributable to Polaris of $103m decreased 47% and diluted earnings per share from continuing operations ("EPS") of $1.81 decreased 46% compared to the fourth quarter of 2022. Adjusted net income from continuing operations attributable to Polaris for the quarter was $113m, down 44%, and adjusted EPS was $1.98, down 43%, in each case as compared to the fourth quarter of 2022.
- Gross profit margin decreased 300 basis points to 20.8% for the fourth quarter, as compared to the fourth quarter of 2022. Adjusted gross profit margin of 21.0% decreased 287 basis points, primarily driven by lower net pricing driven by higher promotional activity and higher finance interest, as compared to the fourth quarter of 2022.
- Operating expenses were $357m in the fourth quarter of 2023 compared to $331m in the fourth quarter of 2022 due to higher general and administrative expenses. Operating expenses, as a percentage of sales, of 15.6% were up 182 basis points in the fourth quarter of 2023 compared to the fourth quarter of 2022.
www.ir.polaris.com
