A massive 217 percent year-over-year increase in snowmobile sales and success of the newly introduced Ranger XP 900 side-by-side led Polaris Industries to beat its first-quarter earnings estimates by six cents per share and boost its full-year outlook, even as revenue fell slightly short of projections.
The Medina, Minnesota-based snowmobile, motorcycle and off-road manufacturer reported earnings of $75.5 million. That’s up from $60.1 million last year. Overall sales rose 11 percent to $745.9 million. Analysts had been expecting sales of $751.46 million.
“With Minneapolis receiving more snow last night, on top of the foot [that] dropped last week, I’m glad Polaris has a strong snowmobile business to capitalize on this interminable winter,” said Scott Wine, Polaris chairman and CEO. “We did sneak out of the cold for a few days in February to test drive our soon-to-be-launched Indian motorcycles and new side-by-side offerings, which were both thrilling and inspiring.”
While not as impressive as its snowmobile sales — which were bolstered by a stronger winter season than 2011-2012 — the off-road vehicle company’s off-road sales rose a healthy seven percent for the three months ended March 31.
On-road vehicle sales dipped three percent, which the company attributed to the same lingering winter weather that has delayed the start of the spring selling season. Parts, garments and accessories sales increased 27 percent over the same period.
Upcoming vehicle introductions in all categories were touted as reason for optimism going forward, and the upcoming reintroduction of Indian Motorcycles was repeatedly cited as a key component of its performance during the remainder of 2013.
“These new products will not generate revenue for a few months, but with outstanding results from both our snow and PG&A divisions, we were able to grind out a decent start to 2013,” Wine said. “Our financial results for the first quarter were more solid than thrilling, but I am encouraged by the energy and effort this team put into delivering double-digit sales and earnings growth.”
Headwinds included continued uncertainty about the North American and European economies, currency weakness, higher promotional costs and payroll tax increases that hit American consumers at the beginning of the calendar year. These were partially offset by overall improvements in commodities and pricing.
“While the frailty of the U.S. and European economies remains a concern, we believe our oncoming product releases and improved brand messaging will trump the economy once again,” Wine said. “We are slightly decreasing our overall outlook for the powersports industry, but anticipate share gains will continue to drive growth across Polaris.”
Money quote: “Our objective is simple: to become a more diversified, highly profitable $5 billion or more global enterprise, and we will achieve that goal only if we can strengthen our position as the world leader in powersports.” — Scott Wine, Polaris chairman and CEO
