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Polaris Industries Enjoys Growth in Q2 2013

Thursday, August 1, 2013
The 90-inch wheelbase of the 2014 Polaris RZR XP 1000 is made to handle rough terrain with ease
The 2014 Polaris RZR XP 1000 is a new side-by-side that will likely contribute to continued growth through coming year.
Polaris Industries maintained its positive growth through the second quarter of 2013, with net income ($80.0 million) up 15% compared to Q2 in 2012 and sales ($844.8 million) up 12%. Polaris’ Chairman and CEO, Scott Wine, offered these remarks in a company press release announcing the figures.

“We are pleased with the strength of our brands and the performance of our team, as they overcame unusually wet weather conditions across North America and sluggish international consumer demand to once again deliver record results. Retail sales to consumers in North America rose 11% in the second quarter, accelerating from softer first quarter results and sequentially reducing dealer inventory ahead of perhaps the most eagerly anticipated new product launch in the company’s history. We also gained market share in our Off-Road Vehicle business, despite increasing competitive pressure. In addition, we expanded gross margin by 120 basis points, driven in large part by increased selling prices and continued product cost reduction efforts.”

Off Road Vehicles

ORV sales went up 7% and netted $619.2 million, thanks largely to double-digit sales percentage growth in the side-by-side market. ATV retail performed well also, with single-digit sales percentage gains compared to the same period in 2012. Off Road Vehicles make up the vast bulk of Polaris’ yearly sales, earning the Minnesota-brand more revenue than the Snowmobile, Motorcycle, Small Vehicle and Parts, Garments and Accessories divisions combined.

Motorcycles

Comprised of the Victory and Indian motorcycle brands, Polaris’ second quarter motorcycle sales were down 6% (49.9 million). Company press attributes the loss to a change in the timing of shipments, which is now based in a “retail flow management” model which operates in response to retail sales rather than annual dealer orders and production timing, as was the model used in Q2 of 2012. North American Victory alone, however, increased sales in the low single digit range, and dealer inventory increased as well, which Polaris also attributes to the new RFM order taking process.

Polaris expects motorcycles sales to improve in the coming months. The official launch of the 2014 Indian Chief with Polaris’ new Thunder Stroke 111 V-Twin engine is slated for August 3, 2013 at Sturgis, and Wine is confident that the new American-made offering in the cruiser segment will boost numbers in the motorcycle division.

“The second half of 2013 will be a momentous time for Polaris,” explained Wine. “In the coming weeks we will introduce some of the most exciting products in our history, which we expect will accelerate retail growth for the remainder of the year and beyond. The much anticipated re-launch of Indian Motorcycles has finally arrived, just a few short years after we purchased the brand in 2011. The motorcycles are gorgeous, the distribution channel is developing nicely and on August 3rd at the motorcycle rally in Sturgis, South Dakota, we will officially bring choice, in the form of the oldest American motorcycle company, back to the motorcycle riding community.”

Small Vehicles

Polaris has three subsidiary companies within its small vehicle division: GEM, Goupil and now Aixam Mega, which was acquired during Q2 of 2013. Sales in this segment improved 190% ($33.7 million).

Parts, Garments and Accessories

Gains reached 33% ($133.5 million) in the Parts, Garments and Accessories segment, with growth attributed partially to the success of the recently acquired Klim and Aixam brands. Increased international sales of PG&A added to the success of the division, up 33% compared to the same period in 2012.

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Comments
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