Polaris reported worldwide sales of $2.2 billion in Q3, down four percent versus Q3 of 2022. Sales in North America were $1.98 billion, representing 88 percent of total sales, which decreased four percent from 2022. International sales of $263 million represented 12 percent of total sales for Polaris, a drop of three percent versus Q3 of 2022. The company says lower shipment volumes and higher finance interest negatively impacted sales in Q3.
As reported, Q3 net income from continuing operations attributable to Polaris of $152 million decreased 20 percent compared to 2022. Adjusted net income from continuing operations attributable to Polaris for the quarter was $157 million, down 20 percent.
The adjusted gross profit margin of 22.6 percent decreased 127 basis points, primarily driven by economic headwinds, higher finance interest, and an unfavorable mix. Operating expenses were $328 million in the third quarter of 2023 compared to $317 million in Q3 of 2022 due to higher selling and marketing expenses. Operating expenses, as a percentage of sales, of 14.6 percent were up 105 basis points in Q3 ’23 compared to the third quarter of 2022.
Off-Road segment results were primarily driven by these factors:
- Sales were driven by higher snowmobile volume, partially offset by higher finance interest.
- Parts, Garments and Accessories (PG&A) sales increased 15 percent.
- Gross profit margin performance was driven by an unfavorable product mix.
- Polaris North America ORV unit retail sales were up five percent. Estimated North America industry ORV unit retail sales were up low-single digits percent.
On-road segment results were primarily driven by these factors:
- Sales were driven by lower volumes.
- PG&A sales decreased six percent.
- Gross profit margin performance was driven by a favorable product mix.
- North America unit retail sales for Indian Motorcycle were down low-teens. Estimated North America unit retail sales for the comparable motorcycle industry were down mid-teens percent.
Marine segment results were primarily driven by these factors:
- Sales results were driven by lower volumes.
- Gross profit margin performance was largely driven by a decrease in sales volumes, resulting in decreased leverage of manufacturing costs, partially offset by higher net pricing.
Outlook for the rest of ’23
Polaris updated its 2023 sales outlook from three percent to five percent versus its previous outlook of up three percent to up six percent versus 2022.
Polaris announced in 2017 that it was making changes to its network to consolidate production and distribution of like products and better leverage plant capacity and embarked on a multi-phase supply chain transformation initiative to continue to leverage its supply chain as a strategic asset.
The company says it realized certain acquisition-related costs associated with acquiring the Walker Evans business during Q3 of 2023.