Polaris Q4 2018 Earnings Overview
Polaris reported another strong quarter and full year with 4th quarter sales of $1.6 billion, up 14% from last year. Full year sales topped $6.1 billion, up 12% from the prior year. The ORV/Snowmobile segment reported sales of $1.1 billion for the quarter, an increase of 7% year over year. The ORV portion declined 2% as the company had a tough comparable with the prior year’s quarter. On a negative note, management expects tariff and trade war costs to total between $110 to $120 million company wide for fiscal year 2019. They will hit the ORV and Motorcycle businesses the hardest. A significant portion of the Q&A on the call revolved around tariff and trade war costs. A summary of the earnings call highlights related to the STOV market follow.
Polaris Earnings Call Highlights
- Polaris side-by-side retail sales increased mid single digits % while ATV retail sales decreased mid single digits %
- Average selling price for the ORV segment increased by 7% but were partially offset by tariff, logistics, and commodity costs
- Polaris gained market share in the side-by-side market for the quarter and the full year
- Management believes they are gaining share from Japanese competitors and Arctic Cat, now owned by Textron
- Global Adjacent Markets revenue increased 4% to $122 million on the strength of commercial, government and defense and Aixam businesses.
- Polaris increased wholegood prices 3.5% for the ORV/Snowmobile segment at the start of 2019 to counter tariff and trade costs
- Revenue for ORV/Snowmobile and Global Adjacent Markets segments are expected to increase mid-single digits % for fiscal year 2019
- Management does not expect to enter into electric powered markets until there is large consumer demand. Their response pertained to motorcycles but appears to be their general philosophy.
Learn more: Earnings Call Transcript (seeking alpha.com)