Polaris Q3 Sales Down -23%, Indian Units Down Low-Double Digits in High Single Digit Percent Market Decline Landscape
Polaris' third quarter results show North America (NA) unit retail sales for Indian Motorcycle down by low-double digits percent, in a market that saw estimated unit retail sales for the comparable motorcycle industry sector down 'only' by high-single digits percent.
Their on-road segment results (which includes the Slingshot 'reverse trike' roadster) were primarily driven by unit lower volumes with PG&A sales -7% and reduced segment gross profit margin performance driven by a negative product mix that was only partially offset by operational improvements.
Polaris Off Road segment results were primarily driven by lower volume, mix, and net pricing that was driven up by higher promotional spend. Polaris NA ORV unit retail sales were down by -3% against estimated NA industry ORV unit retail sales also down low-single digits percent. ORV PG&A sales decreased by -18%.
Against the background that its primary rival in the Marine sector had announced its intention to sell its own Marine division, Polaris reported Marine segment results 'driven south' by lower volumes with segment gross profit margin performance impacted by the decrease in sales volumes and a negative mix.
Polaris CEO Mike Speetzen is quoted as saying that "as consumer confidence and retail demand remain challenging, we have maintained our focus on managing dealer inventory and delivering better operational efficiency.
"A healthy dealer network is one of the critical components to our long-term success, which is why we have anchored our current production and shipment plans to our goal of lowering dealer inventory by 15 to 20 percent by the end of the year. I am encouraged by the progress being made. We expect a challenging retail environment throughout the rest of 2024 and into next year."
Third quarter worldwide sales were down by -23% against Q3 2023 at $1,722m. Within that NA sales of $1,473m represented 85% of the total and decreased by -26% from $1,986m in 2023. International sales of $250m represented 15 percent of the total and were down by -5%.
Q3 gross profit margin decreased 204 basis points to 20.6% with lower volumes and net price, negative mix, and unfavorable plant absorption partially offset by favorable operational efficiencies. Operational expenses were $313m (compared to $328m) and at 18.1% of sales were up by 355 over Q3 2923.
The Company updated its 2024 sales outlook to be down approximately 20% relative to 2023 versus its previous outlook of down 17 to 20". The Company now expects adjusted diluted EPS to be down approximately 65%, an improvement on the prior guidance of -56 to 62%.
The NYSE didn't react well to the Polaris results. Their share price dropped immediately by around 10% from $80.00 as trading opened down to around $72.20 by close. Set that against a 12-month high of $137 at the end of July last year and a post-pandemic high of $146 in April 2021.
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In other news: the once all-conquering FTR 750 looks set to become a collector item, along with Harley's legendary XR750, with Indian Motorcycle effectively forced out of American Flat Track Racing by the decision to turn Supertwins into a production engine only premier class. Also, having only just started to get his feet under the table as the newly minted CEO at Malibou Boats, popular former Indian Motorcycle President and onetime Polaris dealer Steve Menneto finds himself eying the prospect of new ownership with BRP having announced that it is seeking a buyer for its Marine operations. |