Both Polaris and Textron, manufacturer of Arctic Cat, have released its Fiscal Year 2019 third quarter earnings, with both respective companies believing it is poised for a strong end of the year financially.
Facing uncertainty in its bottom line due in part to tariffs imposed by the Trump administration, Polaris announced on Tuesday, Oct. 22, that its net income fell 7 percent to $88.4 million, while overall sales of its products rose 7 percent to $1.77 billion. Its off-road vehicle and snowmobile segment sales were up 11 percent, primarily due to a product mix driven by increased side-by-side sales and sales timing associated with pre-ordered Snow Check snowmobiles. Gross profit margins were flat year-over-year including the negative impact of tariffs and foreign exchange, according to CFO Michael Speetzen.
During a conference call to investors, CEO Scott Wine said the company has requested tariff exemptions from the Trump administration, the approval of which would alleviate some of its financial concerns. However, in their absence the company would begin to explore alternatives such as moving productions overseas.
“We have devoted substantial time and energy toward gaining fair relief for our tariff issues. Our relief approach is focused on educating and informing the administration about the significant impact that Polaris and our employees suffer [from tariffs] because of our heavy investment in U.S. manufacturing…” Wine said to investors. “Part of our argument has been if we don’t get relieved we would have to think about production moves. And I think that is something the administration doesn’t want to see happen, and we don’t want to see it happen. This message has always been well-received, and we clearly see that the administration is committed to righting the trade imbalance with China and protecting American workers. While the political and economic headwinds are likely to increase as we transition into 2020, I’m confident our team will take full advantage of our reduced tariff burden and our broadening product offerings… No matter what happens with the economy, I will bet on this Polaris team.”
Based in Medina, Minnesota, the company important components from other countries, and assembles its powersports products at factories in Roseau, Minnesota as well as Iowa, Wisconsin, Alabama, California, Mexico and Poland.
Meanwhile, Arctic Cat manufacturer Textron reported revenues for the Fiscal Year 2019 third quarter of $3.3 billion, up $59 million compared to the previous year. Manufacturing cash flow before pension contributions, totaled $181 million, compared to $239 million during last year’s third quarter.
Textron revenues are primarily driven by its Aviation and industrial products (including a $600 million order from the Czech Republic for its Bell helicopter), however, one interesting note came when president and CEO Scott Donnelly told investors its specialized vehicle segment, “saw continued favorable performance from the cost reduction and manufacturing realignment actions we initiated in the fourth quarter of last year.” As well as Arctic Cat, this segment also includes its Bass Pro, Cabela’s and TRACKER brands.
“The [specialized] vehicle business historically for us has been a good business…” Donnelly said. “I think obviously we went through some issues last year, which we’ve been working hard to get turned back around. I think it’s heading in the right direction, and is a business that has a lot of potential for us in terms of growth and strong performance. [Textron Specialized Vehicles] made considerable progress in terms of no longer discounting in the marketplace and having a more appropriate distribution strategy and pricing strategy.”
Neither Yamaha or Bombardier Recreational Products (BRP) have reported earnings, but according to Yahoo Finance, the market expects Yamaha to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended September 2019.
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