Polaris reports record Q2 results behind 24 percent sales growth
August 6, 2012
Filed under Features
Victory bikes show 10 percent sales gain in North America
Another quarterly earnings conference call meant another record-breaking quarter for Polaris Industries. The Minnesota-based OEM in July reported record second-quarter net income of $69.8 million for the quarter ended June 30, up 43 percent from the prior year’s second quarter net income of $48.7 million.
Sales for the second quarter 2012 totaled a record $755.4 million, an increase of 24 percent over last year’s second quarter sales of $607.9 million.
“With the second quarter and first half of 2012 in the books, I am encouraged by the performance of the team and the results of the business,” Polaris CEO Scott Wine said during the call. “While weak U.S. GDP growth and a likely recession in Europe are concerning, we continue to enjoy surprising strength in our core North American powersports business. We are capturing healthy market share gains in both off-road vehicles and motorcycles in a climate of increasing competition, and the entire Polaris team is executing at a high level. I am more than comfortable betting on them to lead us through this economic uncertainty.”
Polaris’ North American retail sales to consumers climbed 17 percent during the quarter, compared to the year-ago quarter. Polaris’ Off-Road Vehicles business increased wholesale sales to dealers 20 percent during the quarter, while its On-Road Vehicles business was up 110 percent.
Based on Polaris’ performance in the first half of 2012 and projections for the remainder of the year, Polaris is increasing its 2012 full year sales and earnings guidance. Polaris now expects full year 2012 earnings to be in the range of $4.05 to $4.15 per diluted share, an increase of between 27 and 30 percent over full year 2011 earnings of $3.20 per diluted share. Full year 2012 sales are now expected to grow in the range of 14-17 percent from 2011.
“Buoyed by the strength of the Off-Road Vehicle category and with confidence in our new model year 2013 product offerings, we are again raising full-year sales and earnings guidance. Despite a soft and potentially slowing U.S. economy, we expect a positive reaction to the outstanding lineup we will introduce at [the Polaris dealer meeting in Las Vegas],” Wine said.
Off-Road Vehicle sales increased 20 percent from the second quarter 2011 to $581.1 million. This increase reflects continued North American market share gains for both ATVs and side-by-side vehicles.
Polaris North American ORV unit retail sales were up more than 15 percent from the second quarter last year, with consumer purchases of side-by-side vehicles climbing over 20 percent and ATV retail sales up nearly 10 percent. President and COO Bennett Morgan said both the Ranger and RZR platforms gained share. Polaris estimates the North American industry ORV retail sales increased low double digits percent from the second quarter of 2011. North American ORV dealer inventories were up low double digits percent from the second quarter of 2011, in support of continued strong retail demand, the company said.
“Despite the increases, we still remain a bit too tight in certain key side-by-side … segments and improving delivery remains a key corporate priority,” Morgan said.
Morgan added that Polaris North American ATV retail sales outperformed the industry, “which again grew nicely, up mid-single digits.”
Sales of ORVs outside of North America decreased 8 percent compared to the second quarter 2011, due to weaker international economic conditions and an unfavorable currency impact resulting from the strong U.S. dollar.
Snowmobile sales totaled $8.9 million for the 2012 second quarter, compared to $6.8 million for the second quarter of 2011. The increase is partially due to a mix of higher priced products being shipped during the 2012 second quarter compared to the same period last year. Second quarter snowmobile sales are routinely low for Polaris as deliveries to dealers ramp up in the second half of the calendar year.