Polaris Reports Q2 Powersports Sales -12% with On Road Down by -19%; Indian Motorcycle Loses NA Market Share
Polaris Inc. reported Q2 North America (NA) unit retail sales for Indian Motorcycle down low twenties percent. Estimated North America unit retail sales for the comparable motorcycle industry were down mid-single digits percent.
On Road segment sales (primarily Indian Motorcycle and Slingshot) were $293.3m for Q2, down by -19% compared to the $361.6m for the year-ago quarter; segment gross profit margin was 20.8%, down by 180 bps from the 22.6% in Q2 2023. Q2 On Road PG&A sales decreased by -10%.
Off Road sales were $1,533.8m for Q2, down by -6% compared to the $1,631.4m in 2023; segment gross profit margin of 21.0% was down by 140 bps from 22.4% in 2023. Q2 Off Road PG&A sales increased by 10%.
Powersports retail unit sales for the quarter were down by -8% versus last year, driven by a decline in motorcycles and marine, second quarter ORV was down -4%.
Including $134.1m of Q2 sales in its marine segment (-40%), total Q2 sales were $1,961m, down by -12% compared to last year. North America sales of $1,677m represented 86% of total company sales and decreased by -11% from $1,883m in 2023. International sales of $284m represented 14% of total company sales and decreased by -15% versus the second quarter of 2023.
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| Mike Speetzen, CEO of Polaris: "The second quarter proved challenging as our industry continued to contend with elevated interest rates, inflation and an increasingly cautious dealer and consumer." |
Second quarter market share was flat in off-road vehicles (ORV) and pontoons. Primary factors affecting second quarter sales were lower volume and net pricing, driven by higher promotional spend, partially offset by positive mix. Second quarter reported diluted earnings per share was $1.21, down by -48% versus last year; adjusted EPS was $1.38 (-43%).
It has been a tough year for Polaris in share price terms. Its stock dropped from $82.14 at close the afternoon before these results were released to $74.67 as soon as traders saw them the following morning. After dropping to $71.96 the following day, the price rallied a tad by the end of the week, to still end down though. Set that against a 12-month high in July 2023 of $137.17. However, despite that, share performance, at a market cap of $4.06bn, Polaris remains only some $600m smaller in market valuation terms than Harley-Davidson ($4.66bn).
'the second quarter proved challenging'
Mike Speetzen, CEO of Polaris Inc., is quoted as saying: "The second quarter proved challenging as our industry continued to contend with elevated interest rates, inflation and an increasingly cautious dealer and consumer.
"As we position our business to navigate this economic cycle, our team is focused on making progress against key priorities, including manufacturing efficiency improvements and our pipeline of industry-leading innovation. Reducing dealer inventory is a central priority, both through intentional retail driving efforts and adjusting our production forecasts to further cut back on dealer shipments.
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"On Road segment sales (primarily Indian Motorcycle and Slingshot) were $293.3m for Q2, down by -19% compared to the $361.6m for the year-ago quarter. |
"Although it might take longer than originally anticipated, I am confident in our long-term strategy and the Polaris team's ability to emerge stronger and well-positioned to drive profitable growth, deliver value to shareholders and capitalize on our position as the powersports industry leader."
The company updated its 2024 sales outlook to be down 17 to 20% versus its previous outlook (-5 to -7% versus 2023). The company now expects adjusted diluted EPS to be down 56 to 62% versus 2023, versus the prior outlook of down 10 to 15%.
Operating expenses were $330m in both the second quarter of 2024 and the second quarter of 2023. Operating expenses, as a percentage of sales of 16.8%, were up 194 basis points in the second quarter of 2024 compared to the second quarter of 2023.