Polaris reported its financial results for the first quarter of the 2019 fiscal year this week, and snowmobiles were a part of the solution, not the problem!
The Medina, Minnesota-based company reported Tuesday, April 23, that it had first-quarter sales of $1.496 billion, a 15 percent increase over the same period from 2018. The number, though, includes $185 million in sales from the boating/marine sector, a market Polaris jumped deeper into during the 2018 calendar year.
As with many financial reports, there are good and bad numbers tucked throughout. For instance, net income for the 2019 first quarter was $48 million compared to $56 million a year ago, and adjusted net income was $67 million compared with $74 million the previous year. However, gross profit increased 9 percent, jumping to $352 million in the first quarter of 2019 compared to $323 million a year earlier, but seeing that the profit was generated by larger sales, the gross profit margin dipped from 24.9 percent last year compared to 23.6 percent this year.
That’s a lot of numbers to swallow, and we’ve only scratched the surface: Call in the economics professors!
Moving to sleds, snowmobile whole good sales for the first quarter were $13 million compared to $18 million last year, but remember that the factories aren’t shipping sleds to dealers that time of year so first quarter number are historically paltry. Looking big-picture, the company reported its retail sales increased single digits during the quarter and it said overall snowmobile sales jumped an impressive 20 percent for the 12-month period ending March of 2019. The 850 Patriot engine that Polaris unveiled for model year 2019 certainly played a part, as did a good winter in much of the Snowbelt.
The company also reported it sold fewer ORVs (ATVs and UTVs combined), but the ones it sold had a higher average selling price, resulting in sales up 4 percent, but unit sales down mid-single digits. Motorcycle sales slipped 10 percent – with the unique Slingshot being the biggest drag on the system.
“Polaris’ 65th anniversary year is off to a solid start, as we delivered sound results and finished the quarter with strong momentum,” Polaris CEO Scott Wine said in a statement. “The team executed well, providing quality products to our customers while navigating a dynamic trade environment. Retail sales results were somewhat mixed, with greater than 20 percent snowmobile growth helping to offset modest weather-related declines in ORV, motorcycles and noats, although all three of these segments came on strong at the end of March.
“Our product lineup has never been stronger, our boat brands fared well during the recent boat shows, dealer inventory levels are well-positioned to support the peak spring retail selling season, and our strategic sourcing program is accelerating savings and value enhancement,” Wine continued. “We remain steadfastly committed to enhancing our customer-centric culture, which amplifies our investments in innovation and operational prowess, and as we look to the balance of 2019, we are confident about gaining market share as we continue bringing innovative products to our customers and solidifying our position as the leader in Powersports.”
Highlighted bullet points at the beginning of Polaris’ financial report included:
- North American retail sales decreased 3% for the quarter compared to last year; ORV N.A. retail sales were down mid-single digits percent and motorcycle sales were down high-single digits percent, both negatively impacted by weather
- Gained market share in snowmobiles for the season ending March 2019; maintained market share in Indian motorcycles in a challenging industry environment
- Dealer inventory was down 1% year-over-year for the first quarter 2019, in-line with expectations
- Polaris increased its full year 2019 earnings guidance and now expects earnings to be in the $6.05 to $6.30 per diluted share, which includes the absorption of $80 to $90 million of additional tariff costs anticipated in 2019 over 2018. Full year 2019 adjusted sales growth guidance remains unchanged at up 11% to 13% over the prior year.
To read most on Polaris’ financial report, check out the report on the website of our sister publication Powersports Business.
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