Monthly Archives: February 2015

Polaris Reports 2014 Q4 Earnings

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The new four passenger RZR 4 EPS in Havasu Red Pearl from Polaris.

A constant stream of new models like the new four passenger RZR 4 EPS in Havasu Red Pearl help keep Polaris growing.

Polaris continued on the path of strong growth with another record quarter. Managment reported net income was $135.4 million for the fourth quarter of 2014, up 25 percent from the previous fourth quarters net income of $108.7 million. Sales for the fourth quarter of 2014 totaled a record $1,275.0 million, an increase of 18 percent over last years fourth quarter sales of $1,083.7 million.

For the full year ended December 31, 2014, Polaris reported net income from continuing operations of $454.0 million for the full year 2014, up 19 percent from the previous years net income from continuing operations of $381.1 million. Sales for the full year 2014 totaled a record $4,479.6 million, an increase of 19 percent compared to sales of $3,777.1 million for the full year 2013. Some of the highlights related to small, task-oriented vehicles follow.

  • Off-Road Vehicle sales , which includes ATVs and UTVs or side-by-sides, increased 19% from the fourth quarter 2013 to $781.5 million. This increase reflects continued market share gains on strong demand for both ATVs and side-by-sides.
  • Polaris North American ORV unit retail sales were up low-double digits percent from the 2013 fourth quarter with consumer purchases of side-by-side vehicles up double-digits percent and ATV retail sales up high-single digits percent for the 2014 fourth quarter.
  • Polaris introduced over twenty new MY14.5 and MY15 ORV models in 2014, including the all-new RZR® XP 900 trail and RZR® XP4 900 trail, several new value models, and two models in a newly defined category of single-seat, ride-in ATVs, the Polaris ACE.
  • Polaris extended their market share lead in the North American ATV industry for the fourth straight year with retails up mid-single digits in an industry that only rose slightly.
  • ACE sales accelerated notably in the fourth quarter as marketing and the new 570 model began to impact the marketplace.
  • Four recent model year ’15 introductions include the new electronically fuel-injected RZR 170 and the new RZR 900S4, both of which have already begun to ship.
  • Commercial. Sales increased by over 80% in the fourth quarter driven by initial Ariens-Gravely supply vehicle shipments, strong national accounts growth and notably improved BRUTUS and Bobcat retail performance.
  • In the Small Vehicle division which includes GEM, Aixam and Goupil, fourth quarter revenue declined 11% due to the weak French economy afflicting both Aixam and Goupil. For the full year 2014, sales increased 28% fueled by Aixam market share gains and increased sales from both our GEM and Goupil businesses.
  • Polaris significantly outperformed in the ORV market in Europe.
  • For 2015 management expects ORV is expected to grow mid-single digits, driven by new products but offset by further implementation of RFM, their new inventory management program, and slower international demand.

Learn more:  Seekingalpha.com (earnings call transcript)

Comment:  Polaris continues to dominate the market, although like other manufacturers they have been hurt by slower sales in Europe and in countries like Russia. Expect more of the same in 2015 as they continue to rollout products to segment the market and cover a range of price points. They are likely to add more models for their push into the commercial segment as well.

Arctic Cat Announces FY2015 Q3 Earnings

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The 2015 Wildcat Sport XT, a recent addition to the Arctic Cat side-by-side lineup.

The 2015 Wildcat Sport XT, a recent addition to the Arctic Cat side-by-side lineup.

Last week Arctic Cat reported on their third quarter earnings for fiscal year 2015. For the quarter ending on December 31, 2014 net sales for the third quarter decreased to $193.7 million from $225.8 million for the same quarter last year and net earnings decreased to $7.5 million or $8.9 million as adjusted from $12.1 million. Year-to-date net sales increased 2.5% to $599.9 million from $585.1 million a year ago and net earnings decreased to $26.4 million or $32.3 million as adjusted from $41 million. Here are some highlights of the earnings call as it relates to utility vehicles.

  • ATV and UTV sales for the quarter increased 7.3% to $83.9 million from $78.2 million as growth in Wildcat side-by-sides were offset by decreases in core ATVs.
  • For the first three quarters to date sales of ATVs and UTVs decreased 4.3% to $217.3 million from $227.2 million. Strong sales of Wildcat side-by-side models were offset by lower than planned sales of core ATV sales to dealers in North America and international regions, including Russia.
  • A $7 million charge in the 4th quarter will be taken related to reducing core ATV inventory.
  • Wildcat models gained further market share in this category during the third quarter this year.
  • For the calendar year sales of side-by-side Wildcats grew 34% versus the industry’s 17%.
  • Three new Wildcat Sport models on a new 60-inch wide chassis were introduced. The new chassis’ width is a mid-sized option between the original Wildcat and the recently successfully introduced Wildcat Trail model, which has a narrower 50-inch stance.
  • A new 2016 model year HDX Prowler will be announced in early February
  • Arctic Cat signed an OEM agreement with a terrain company during the third quarter to build private label side-by-side vehicles for the commercial line equipment business. They expect to begin shipping products to this customer in March.

Learn more:  Seekingalpha.com (earnings call transcript)

Comment:  In search of growth many UTV manufacturers are looking to enter into other market segments either by adding new product lines or developing partnerships. Arctic Cat’s new Sport line and OEM agreement are more examples of this trend. From comments during the earnings call, the OEM agreement is with Toro. This will give Arctic Cat a distribution network into the commercial and turf markets. Their current powersports network of dealers is not the best match for tapping into the commercial market. For Toro, UTVs are a relatively small part of their business and development resources are probably better spent their core products, while they take advantage of Arctic Cat’s engineering expertise in the UTV market.