Polaris Industries Inc. has reported a strong second quarter in 2015, with motorcycle sales particularly robust. Sales of Victory and Indian Motorcycles, along with the three-wheeled Slingshot, increased 57% compared to figures from the same three month period in 2014, reaching $162 million compared to $103 million last year. Year-over-year sales for the first six months of 2015 are up as well, reaching $299.5 million compared to $181.9 million in 2014, a 65% bump.
The company’s total sales for Q2 across all segments surpassed $1.1 billion dollars, marking an 11% increase, contributing to the $2.1 billion in sales through the first six months, a 13% improvement over the first half of 2014. Gross profit is up 5% to $319 million across all segments for Q2 2015 and has reached $613.1 million for the six month period, up 9% compared to 2014.
Breaking down the motorcycle segment further, Polaris reveals that the Indian brand achieved an “over 100% increase in retail sales.” The Slingshot was also a significant contributor to the segment’s growth. Victory retail sales were down slightly, but the company attributes this to “poor product availability of the new Victory Magnum and Magnum X-1, a result of the paint capacity constraints in the Spirit Lake facility.”
Polaris has invested nine million dollars in a new motorcycle paint system at its Spirit Lake location, a factor which has “dampened” earnings in Q2, according to Polaris Chairman and CEO Scott Wine.
The company’s Off-Road Vehicle (ORV) segment was by far the most successful however, reaching $688.8 million in sales for the quarter, a 2% increase over Q2 in 2014. Snowmobile sales reached $19.3 million, a 215% jump compared to the same period last year, owing to “the timing of snowmobile production and a higher mix of Polaris’s new premium snowmobiles.” Parts, Garmets and Accessories grew 17% in Q2 2015, achieving $187.5 million in sales.
“In addition to reporting record second quarter sales and earnings, there are numerous positive undertones to our results this quarter. Motorcycle demand, notably including Slingshot, remains exceptionally high. Our Asia Pacific/Latin America business continues to grow and we are encouraged by the favorable response to the Multix launch in India last month. Between ongoing improvements in our inventory management systems and North American retail sales growing 11%, dealer inventory growth moderately decelerated in the second quarter,” said Wine. “However, earnings were dampened by significant cost pressures, and delayed shipments, related to continued difficulties with our new motorcycle paint system in Spirit Lake, Iowa. We pulled out all the stops to increase throughput in an effort to meet the growing demand for our Indian, Victory and Slingshot customers, accepting the substantial costs commensurate with that push. Although production still cannot keep pace with demand, we are confident in our plans to further increase our motorcycle throughput in the second half of the year, and as such, are maintaining and narrowing full year guidance for sales and earnings per share.”
Wine continued, “Innovation remains a cornerstone of Polaris’ success, and at our dealer show next week we will introduce our model year 2016 powersports lineup that will further extend our market leadership. In spite of the short-term headwinds we are facing, both external and of our own making, I am confident this strong and talented Polaris team can continue to deliver industry-leading returns for our shareholders.”