Nov. 10, 2008 – Polaris: Strong UTV sales lead to record quarter

Strong continued side-by-side sales helped Polaris Industries break a record in third-quarter revenue, the company recently announced.
Polaris’ UTV retail sales and wholesale shipments were up more than 20 percent compared to the year-ago period, company President Bennett Morgan said in a conference call explaining the company’s third-quarter performance.
Overall, Polaris reported sales of $580.3 million, a 7 percent increase over the year-ago period. The company’s net income dropped slightly, down 3.5 percent to $37.7 million.
Three of the company’s four product lines saw increased sales, with ATV, snowmobile and PG&A all having gains over the year-ago period. Polaris’ Victory sales were down slightly (2 percent), although that doesn’t reflect retail sales. Victory’s retail sales were up slightly and the brand actually increased market share during the quarter, which ended Sept. 30.
The increased UTV sales were one of the key reasons why Polaris’ ATV segment sales were up 5 percent to $371 million. Morgan said the company expects continued strong performance in the side-by-side segment, noting Polaris’ summer dealer meeting “was a home run for side-by-side business” and that dealer orders exceeded expectations.
The company’s core U.S. ATV sales, which now only account for about 20 percent of the company’s gross margin in the ATV segment, followed the industry as a whole, with sales down at least 28 percent.Outside of the U.S., core ATV sales in Canada were “much stronger with Polaris winning market share,” Morgan said, while European sales were down.
Inventory is a mixed bag for Polaris, with factory inventory down 4 percent from the previous quarter but it remains 4 percent above the year-ago period. Morgan noted the company remains on track to reduce factory inventory by year-end. Dealer inventory remains down compared to a year ago.
In other quarterly news, Polaris reported:

  • Income from financial services decreased substantially — more than 50 percent — as a result of the company’s retail credit provider, HSBC, eliminating the volume-based fee income payment to Polaris. Still, the availability of retail credit to consumers has not been affected. Polaris said during the third quarter more than 50 percent of consumer loan applications were approved by HSBC or GE and 41 percent of U.S. customers financed their Polaris product through HSBC or GE. Both the approval rate and penetration rate increased this quarter.
  • The company’s business with its military partners is up dramatically, with revenue from that area up more than 80 percent compared to a year ago. New CEO Scott Wine also hinted at more upcoming partnerships with companies outside of the powersports industry. A company announcement on this is expected by January.
  • PG&A sales were up dramatically. The quarterly revenue of $93.4 million represents a 20 percent increase over the year-ago period.

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