Last week Polaris executives did an earning call to the financial markets and investors. Here are highlights and excerpts…
Scott Wine, Polaris, CEO: “I'm certainly happy that our team fought their way to double-digit sales and earnings growth in the quarter, quite an accomplishment in light of the combined headwinds of weak ag and oil markets, continued currency weakness in an ultra-competitive powersports industry. Sales increased 12% to $1.45 billion, and net income rose 10% to $155 million. Both motorcycle production and retail sales increased dramatically in the quarter. And while our model year 2016 side-by-side and ATV instructions were well-received by both dealers and consumers, our substandard 3% ORV revenue growth reinforces our commitment to get our dealer fundamentals right by the end of the year. Demand was solid in Mexico and much of Latin America, while the strong dollar weighed on sales and overall gross profit margins in most other non-U.S. markets.”
Bennett Morgan, Polaris President and COO: "Canadian retail sales continued to be a drag declining low-single digits for the quarter and year-to-date, and we also saw increased headwinds due to continued oil and agricultural industries' weakness. For Q3, the North American powersports industry growth slowed to low-single digits. Snowmobiles are up mid-20% related to planned earlier shipment timing of new models and mixed snowfall last season. We are on track to achieve mid-single digit dealer inventory growth, while improving motorcycle inventory positions by year end.”
Bennett continued, “Snowmobiles: Polaris third quarter revenue increased 14% and year-to-date revenue was up 19% as model year 2016 shipment timing was executed earlier to provide dealers and consumers with access to our new RMKs and Snowcheck products. The year-to-date increase will be netted out in lower quarter shipments as our guidance is unchanged. Timbersled shipments began in the third quarter and are included in snow revenue. As expected, the North American snowmobile industry is off to a slower start due to last year's snow conditions. Polaris is notably outperforming and gaining early share with retail sales declining only low-single digits, as industry retail sales declines are in the mid-teens. We are cautiously monitoring the risk of poor snow in the Midwest last season, the potential impact of a strong El Nino weather pattern this season and weaker Canadian and international currencies, which we expect to offset with share gains from our new AXYS RMKs and our strongest and broadest product lineup in snowmobiles in years.”
Scott Wine, Polaris CEO: “We benefit when ag and oil markets in the U.S. and Canada do well, but are not expecting those industries to turn in our favor in 2016. We remain bullish on the long-term trends for agriculture and believe the U.S. will benefit disproportionately when oil rebounds. While competitive offerings and promotional efforts expand, we anticipate slightly slower growth in the powersports industry in general, and the side-by-side segment in particular. We do, of course, expect to win the competitive battle in powersports with a consistent stream of innovative new motorcycles and off-road vehicles, improving dealer fundamentals and enhanced execution at all levels of our business. With industry-leading products, brands and scale, we will expand dealer profitability and our own in the year ahead.”
Source: Seeking Alpha
