Polaris Reports Strong Quarterly Earnings for Q3 2014

New 2015RZR XP 1000 EPS Desert Edition

RZR XP 1000’s like the new 2015 RZR XP 1000 EPS Desert Edition helped drive sales.

Polaris reported an 18% year over year increase in revenue for third quarter 2014 driven by increases in their motorcycle, PG&A and Off-road Vehicle (ORV) divisions. ORV which includes side-by-sides and ATVs recorded a 17% increase. With another strong quarter, management raised their guidance for full-year results in 2014. Some highlights of the earnings call as it relates to Small, Task-Oriented Vehicles include:

  • ORV revenue up 14% year-to-date
  • Market share gains in the quarter for both side-by-sides and ATVs in North America adds to their #1 positions
  • ORV revenue was driven by side-by-sides that outpaced the industry believed to be growing at 10%
  • The 2 and 4 seat RZR XP 1000’s as well as the RZR 900 Trail are selling well
  • In the commercial UTV segment Brutus retail sales continue to grow sequentially and year-over-year for both Polaris and Bobcat
  • Commercial national accounts and fleet sales were strong
  • The Gravely Atlas UTV was launched in the quarter
  • Defense related ORV revenue was flat for the quarter but up 25% year-to-date with international sales of the MRZR contributing
  • The Small Vehicle division reported an 8% revenue increase in the quarter due to GEM and Aixam
  • Year-to-date Small Vehicle revenue is up 52%
  • GEM reported retail sales increase of 20% on action in B2B and GSA sales
  • While Aixam grew despite a weakening European market, Goupil revenue decreased with softness in the French economy, their major market
  • The Opole, Poland factory opened and will produce ORV and other products for the European and Middle East markets
  • International sales were helped by strong ORV sales in India and Australia
  • Currency issues provided some headwind in foreign markets

Learn more:  Seekingalpha.com (earnings call transcript)

Comments:  Despite some macro economic issues the Polaris juggernaut keeps on rolling as they continue to add market share despite increased competition in the side-by-side and ATV markets. Their large market share and subsequent production volume gives them an advantage in driving down vehicle costs and provides funding for their robust R&D budget and new model pipeline. The large number of models they market allows them to target specific sub-segments with specific vehicle capabilities and characteristics. In turn this makes it more difficult for competitors to match up on a vehicle to vehicle basis in each sub-segment.

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