Polaris Industries Inc. (NYSE: PII) this morning reported third quarter 2017 sales of $1,478.7 million, up 25 percent from $1,185.1 million for the third quarter of 2016. Adjusted sales, which excludes the impact from Victory Motorcycles® net sales for the third quarter of 2017, were $1,480.3 million for the 2017 third quarter, up 25 percent. The Company reported third quarter 2017 net income of $81.9 million, or $1.28 per diluted share, compared with net income of $32.3 million, or $0.50 per diluted share, for the 2016 third quarter. The reported net income includes costs related to the wind down of Victory Motorcycles, certain Transamerican Auto Parts (“TAP”) integration costs, and manufacturing network realignment costs. Adjusted net income for the quarter ended September 30, 2017, excluding these costs, was $93.5 million, or $1.46 per diluted share.
Motorcycle segment sales, including PG&A, totaled $155.1 million, a decrease of 14 percent compared to $181.2 million reported in the third quarter of 2016 which included $39.4 million of Victory Motorcycle wholegood, accessory and apparel sales. Indian motorcycle wholegood sales increased in the low twenty percent range in the third quarter driven by new product introductions and improving brand awareness. This increase somewhat offset lower Slingshot® sales. Gross profit for the third quarter of 2017 was $10.4 million compared to $20.3 million in the third quarter of 2016. Adjusted for the Victory Motorcycles wind down costs of $7.6 million, motorcycle gross profit was $17.9 million, down from the third quarter last year due primarily to lower Slingshot volume.
North American consumer retail demand for the Polaris motorcycle segment, including Indian Motorcycle and Slingshot, was up mid-single digits percent during the 2017 third quarter. Indian Motorcycles increased retail sales 16 percent, partly driven by new model introductions including the new Chieftain Elite and Limited models and Roadmaster Classic. Indian Motorcycle market share surpassed the ten percent mark in September. Slingshot’s retail sales were down although the rate of decline decelerated during the quarter. Motorcycle industry retail sales, 900cc and above, were down high-single digits percent in the 2017 third quarter.
“Our emphatic return to profitable growth in the third quarter was a testament to the power of the Polaris brand, the strength of our dealer network and the competitive drive of the Polaris team. During the quarter, strong retail growth in both North America and nearly all of our International markets drove record sales and highlighted our ongoing product innovation, improving product quality and sharpened execution. We delivered North American unit retail sales growth of 13 percent and overall Company sales growth of 25 percent, about half of which was organic, while lowering North American dealer inventory seven percent year-over-year. Results were strong throughout our portfolio, led by Indian Motorcycles’ exceptional performance as they accelerated share gains and outpaced a declining North American motorcycle market while also delivering strong growth in Europe, Australia and Asia. I am particularly proud of the improved performance from our Off-Road Vehicle business, which was fueled by a well-planned and executed Factory Authorized Clearance sale and the strong reception of our model year 2018 introductions. Encouragingly, RZR retail sales were especially strong in the quarter, and we had our best ATV retail quarter in two years. Delivering such strong results, while also launching the all new RANGER XP 1000, the best utility side-by-side ever built, is a fitting way for Matt Homan to wrap up his influential 15 year run with Polaris. I want to thank Matt for his significant contribution and wish him continued success in his career. Welcoming Chris Musso earlier this month was also a major victory and we are excited to have him grab the reins of our industry-leading ORV business,” commented Scott Wine, Chairman and Chief Executive Officer of Polaris Industries.
“Most importantly, strong total Company sales growth translated to bottom-line improvement. Despite higher than expected costs for warranty and re-work and complications from Hurricanes Harvey and Irma, we delivered significant operating profit growth and earnings per share expansion for the quarter. With strong growth in revenue, profitability and cash flow I feel very good about the performance of the Polaris team and our improved outlook for the fourth Quarter and beyond,” said Wine.
POLARIS INDUSTRIES INC.
RECONCILIATION OF GAAP “REPORTED”
TO NON-GAAP “ADJUSTED” RESULTS
THREE MONTHS ENDED SEPTEMBER 30, 2017
(In Thousands, Except Per Share Data)
(Unaudited)
Everybody in survival mode. But it will get better very fast for those able to grow by taking market share to weak competition.
Look for Polaris to bail on motorcycles altogether sooner than later.
BobS I’m with you buddy thanks for the heads up. I would hate to get caught with my pants down when they discontinue something. I would cry
EAT A DICK Polaris!!
i think that slingshot will go the way of the VROD, indian and harley can co-exist
I am not a market analyst or a finance guru but I am a pretty decent bike builder and a trend watcher. Polaris should be able to capitalize on the success of Indian on the flat track. However both powerplants on their top two models are so damn ugly it doesn’t matter how good they run or sound. I am not sure what the answer is but if I were a gambling mam I would release a huge in line four, touring bike and a half litre street tracker/ hooligan bike and call them the Tatanka the Warrior and the Arrow. Then cull the weeds.
Tough market. Polaris will survive and I will be there rooting them on.
Shows they made the right call with Victory. They’ll be around for a long time to come.
Its going to be entertaining to see them cut bait on Indian in a couple years and screw everyone over like they did on Victory. They care about paying their board members, thats it.
And yet Polaris still laid off over 100 people a week and a half ago and someone that has escaped the news.
JEEZ can they make the radiator any bigger
H-D and Polaris will merge and just make three wheeled electric scooters for the blue haired biker crowd.
That bike is horrendously ugly.