‘Strong retail demand/deposits’ for Polaris products, analyst says

Both the Polaris Slingshot and Indian Scout “have strong retail demand/deposits,” according to a research note provided to Powersports Business by RBC Capital Markets analyst Joe Spak.

Spak provided takeaways after hosting management meetings with Polaris executives, including COO Bennett Morgan and CFO Mike Malone.

Spak also writes that additional paint capacity will be “coming online (within 2-3 weeks) which crimped 3Q14 Victory Magnum and 2-tone Indian bikes.”

Here are some other outtakes from Spak’s report:

• Slingshot has 360 dealers ready to retail, with Spak reporting each dealer stocking at least three. “This also makes dealer economics favorable. For example, management expects dealer profitability for Slingshot at 12 units/year (though disappointed if not higher) vs. Indian at ~50 units/year. While early, product might have broader appeal than thought (at least age-wise). Now building the brand, but overtime, similar to other PII ventures expect a family of products (and $200-$300mm in sales in a few years).

• “Victory was disappointing in Q3, with retail down mid-teens in Q3.”

• “Management sees double-digit side-by-side industry growth as sustainable over the next few years driven by household penetration and reaching new needs. Overall, North American ORV retail sales remain approximately 35 percent below its approximately 1-million unit peak.”

• “Separately, dealer floor capacity also needs to expand for the next level of growth.”