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Polaris reveals 2022 Q4 earnings

Polaris has today released its fourth quarter and full year 2022 earnings results. Polaris shared this:

“Polaris ended the year strong. We delivered record full year sales and earnings, a testament to our team’s focus, dedication, and execution,” said Mike Speetzen, chief executive officer of Polaris Inc. “Throughout the year, we continued to assert our position as the global leader in powersports by renewing our commitment to our core businesses, delivering rider-driven innovation, and successfully navigating a challenging environment. Looking ahead, we see significant opportunity for success supported by a strong pipeline of new products and continued supply chain improvement. Although macroeconomic headwinds may persist in 2023, our team remains agile and poised to deliver industry-leading innovation that is consistent with the Polaris brand.”

Financial and Operational Highlights

  • Record full year 2022 sales were $8,589 million, up 15 percent compared to last year.
  • Record full year 2022 reported diluted earnings per share from continuing operations was $10.04, up 27 percent versus last year; adjusted diluted earnings per share from continuing operations was $10.40, up 15 percent versus last year.
  • Record fourth quarter sales were $2,404 million, up 21 percent compared to last year.
  • Record fourth quarter reported diluted earnings per share from continuing operations was $3.36, up 129 percent versus last year; adjusted diluted earnings per share from continuing operations was $3.46, up 57 percent versus last year.
  • Primary sales drivers in the quarter were higher volumes, strong pricing and favorable mix, offsetting foreign exchange-related headwinds.
  • Retail sales for the quarter were down six percent versus last year despite improving performance in utility Off Road and Indian Motorcycle, offset by softness in recreational Off Road demand.

Performance Summary (Reported)

Polaris Inc. has released its fourth quarter and full year 2022 results. The company reported worldwide sales of $2,404 million, up 21 percent versus the fourth quarter of 2021. North America sales of $2,108 million represented 88 percent of total company sales and increased 23 percent from $1,715 million in 2021. International sales of $296 million represented 12 percent of total company sales and increased seven percent versus the fourth quarter of 2021. Sales growth in the fourth quarter of 2022 was driven by sustained shipment momentum supported by modest improvement in the supply chain, higher pricing and favorable mix, offsetting foreign exchange-related headwinds.

As reported, fourth quarter net income from continuing operations attributable to Polaris of $197 million increased 116 percent and diluted earnings per share from continuing operations (“EPS”) of $3.36 increased 129 percent compared to the fourth quarter of 2021. Adjusted net income from continuing operations attributable to Polaris for the quarter was $202 million, up 48 percent and adjusted EPS was $3.46, up 57 percent, in each case as compared to the fourth quarter of 2021.

Gross profit margin increased 367 basis points to 23.8 percent for the fourth quarter. Adjusted gross profit margin of 23.8 percent increased 358 basis points driven by higher volumes and favorable pricing partially offset by warranty costs.

Operating expenses were $331 million in the fourth quarter of 2022 compared to $254 million in the fourth quarter of 2021 due to higher marketing and G&A expense. Operating expenses, as a percentage of sales, of 13.8 percent were up in the fourth quarter of 2022 compared to the fourth quarter of 2021.

Segment Highlights (Reported)

Off Road segment results were primarily driven by these factors:

  • Sales were driven by higher pricing and favorable product mix.
  • Parts, Garments and Accessories (PG&A) sales increased eight percent.
  • Gross profit margin performance was driven by favorable pricing and higher volumes, more than offsetting higher warranty expense.
  • Snow season-to-date unit retail sales were down due to sale and ship holds associated with recalls.
  • Polaris North America ORV unit retail sales were down mid-single digits percent. Estimated North America industry ORV unit retail sales were down low-single digits percent.

On Road segment results were primarily driven by these factors:

  • Sales were bolstered by a modestly improving supply chain environment, as well as favorable mix and price.
  • PG&A sales were essentially flat.
  • Gross profit margin performance was driven by favorable product mix and higher volumes, which more than offset higher warranty expense and foreign exchange headwinds.
  • North America unit retail sales for Indian Motorcycle were up low-single digits percent. North America unit retail sales for the comparable motorcycle industry were down mid-single digits percent.

Marine segment results were primarily driven by these factors:

  • Sales results were driven by higher pricing and favorable product mix, as well as healthier inventory levels heading into boat show season.
  • Gross profit margin performance was largely driven by better mix.

2023 Business Outlook

The Company expects 2023 sales to be flat to up five percent versus 2022. The Company expects adjusted diluted EPS from continuing operations attributed to Polaris Inc. common shareholders to be down three percent to up three percent versus 2022.

Polaris has not provided reconciliations of guidance for adjusted diluted net income per share, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable, without unreasonable efforts, to forecast certain items required to develop meaningful comparable GAAP financial measures. These items include restructuring and realignment costs and acquisition integration costs that are difficult to predict in advance in order to include in a GAAP estimate.

As Seen On Powersports Business

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