Polaris’ 2Q Income Down 22%
Polaris Industries Inc. net income for its second quarter ended June 30, 2006, was $22.7 million, or $0.53 per diluted share, down from $29.1 million or $0.66 per diluted share for same three-month period last year. Second quarter sales totaled $384.3 million, a decrease of 13 percent from last year’s second quarter sales of $442.3 million.
For the six months ended June 30, Polaris net income was $33.9 million or $0.79 per diluted share, down from $47.0 million or $1.06 per diluted share for the same six-month period last year. Sales for the recent six-month period totaled $717.8 million, down ten percent compared to sales of $800.6 million for the same six months in 2005.
Sales of Victory motorcycle sales were up 26 percent in the second quarter and 17 percent for the six months ended June 30; ATV sales were down 5 percent in the second quarter and down 7 percent in the half-year.
Particularly grim are snowmobile sales. Second quarter sales were $5.3 million, down from $51.9 million during the same three-month period last year. Sales for the six months ended June 30 were $7.8 million, down from $59.1 million during the same six-month period last year.
Polaris said snowmobile order levels declined primarily because of elevated season-ending dealer inventory levels whicih were driven by weaker retail sales due to below average snowfall in many regions of the country.
“Our second quarter results met our expectations in a continuing challenging environment,” said Tom Tiller, Chief Executive Officer. “As expected, reduced North American ATV and snowmobile shipments to dealers in the 2006 second quarter resulted in reduced overall company sales and earnings when compared to the same period in 2005.”
OUTLOOK
For the full year 2006, Polaris is narrowing its earnings per share guidance from the previously announced range of $3.08 to $3.20 to the current range of $3.10 to $3.20 per diluted share.
Tiller said Polaris believes North American dealers will continue to make modest adjustments to their ATV inventory levels through reduced orders in the second half of the year. The company expects sales to decline three to five percent for the full year 2006, a slight change from previously issued guidance of a decline of one to three percent.
“The efforts of both Polaris and our dealers to reduce ATV and snowmobile inventory levels are only a part of the important, proactive steps that are being taken to effectively manage the business through a challenging economic period in which rising interest rates and high gasoline prices have negatively impacted consumer sentiment and discretionary spending,” Tiller said. “Although dealer ATV inventory levels have decreased sequentially, we expect further reductions as we move through the balance of the 2006 calendar year as dealers continue to desire lower ATV inventory levels.”
“In addition to adjustments to our ATV and snowmobile production volumes, we have worked to source components from lower cost suppliers and reduce our internal operating costs,” he said. “As a result of these efforts and positive product mix changes, we are starting to realize improved gross margins despite lower sales levels.”
