Tariff Questions Dominate Polaris Earnings Call

Polaris 2019 Ranger XP 1000 EPS 20th anniversary

The 2019 Ranger XP 1000 EPS 20th Anniversary edition helped drive sales despite tariff concerns.

Financial Results Overview

Tariff questions dominated the Polaris Industries earnings call to discuss their Q3 financial results for fiscal year 2018. The manufacturer of the RZR, Ranger and General side-by-sides reported adjusted revenue of $1,653 million, an increase of 12% from $1,480 million from third quarter 2017. Net income increased 21% from $98 million to $118 million. (Financial figures are compared to Q3 2017 unless noted)

STOV Segments Perform Solidly

Overall ORV/Snow segment revenue increased 3% from $1,007 million to $1,036 million. Lower snowmobile revenue was more than offset by a 12% increase in ORV revenue. ORV includes UTVs and ATVs. North American (NA) retail sales, driven by side-by-side sales, increased 1% in the quarter against a tough comparable. In comparison, management estimated that industry wide NA ORV sales improved low single digits for the quarter. Polaris side-by-side market share for the quarter remained the same.

The average selling price of ORVs overall increased 5%. Management reports that the initial launch of the 2019 model year was successful with good response from consumers and dealers. In particular, the new Ranger XP 1000 variants drove sales. Furthermore, the company’s inventory management system, RFM, is producing results with the best side-by-side delivery performance to date. In addition, lower promotional costs accompanied the stronger sales. Comments on individual markets indicated that the oil and gas customer segment improved while agriculture decreased some.

Global Adjacent Markets Gain

The Global Adjacent Markets (GAM) segment made solid gains as well. Sales increased 5% from $92 to $98 million. This segment includes vehicle sales to commercial, government and defense clients in addition to Aixam quadricycle sales in Europe. In addition, the GAM segment includes vehicles like Ranger and Brutus UTVs, military RZRs, GEM electric vehicles, Taylor-Dunn industrial vehicles and Goupil electric vehicles based in France. Management reported solid sales for  Goupil vehicles and strong orders from fire and police departments, and other government agencies.

ORV and GAM Drive International Growth

Sales to international markets jumped 10% with a strong showing from the ORV/Snow segment, up 9%, and the GAM segment, up 6%. Looking at sales by region, the Europe and Middle East drove overall international sales while Latin America increased only slightly and the Asia Pacific region decreased.

Full Year Guidance Improves

Polaris increased their guidance for the ORV/Snow segment. They now expect a low double digit increase in sales.The GAM segment should increase sales by low double digits, which is unchanged from previous guidance.

Tariff Impacts

Tariff impacts raised expenses by $8 million for the quarter and are expected to total $40 million for the year. The renegotiated NAFTA deal, the USMCA, is expected to have a neutral effect. However, the 301 tariffs, especially the upcoming List 3 tariffs could have more severe repercussions. Currently, the company is dealing with List 1 and List 2 tariff impacts. Polaris is at a disadvantage related to 301 List tariffs because their main competitors produce their vehicles in Mexico or assemble them in the US using Japanese parts. Therefore, these companies are not subject to the same tariffs.

Tariff Mitigation Plans

Management laid out a three pronged approach to mitigating the potential List 301 tariffs. First, they will try to negotiate with their suppliers to share some of the increased costs. Second, they may increase prices. Thirdly, they hope to lobby the current administration to obtain an exemption from the tariffs. Polaris argues that the tariffs are primarily hurting them, but they are the only US based manufacturer among the major players in the market. Furthermore, the company has been increasing their US based manufacturing. At this time, Polaris is not providing any specific quantitative guidance for tariff impacts for 2019.

Other Future Factors

For the powersports market in general, management expects that there will be a need to increase pricing to offset inflation, tariff impacts and increasing commodity and logistics costs. Furthermore, management stated, “As the industry leader, we’re not afraid to lead on price.”

The newly launched Factory Choice program, which gives the customers and dealers an opportunity to make differentiated vehicles from the factory and has been popular, gives Polaris optimism. The program should help drive sales in the future.

The dealer inventory profiles produced under the RFM program this year for side-by-sides significantly improved product availability. The increased availability bolstered sales, raising similar expectations moving forward.

Learn more:  Polaris Earnings Call Transcript (Seekingalpha.com)

SVR’s Take

This was another solid quarter for Polaris. The sales increases for side-by-sides were not gangbusters at first glance, but they are being compared to a really strong third quarter in 2017. The new 2019 vehicle lineup should drive sales more fully in the fourth quarter. The GAM segment is slowly growing into a significant business and could become a $500 billion business in about two years. On a cautionary note, the tariff impacts could slow progress for Polaris, especially in contrast to fast growing and Canadian based Can-Am. Increased pricing could potentially hurt sales, although as a premium brand Polaris can pass on some pricing. The other alternative is that they will take hit to their margins and generate less income.

 

 

Textron Off Road Struggles with Arctic Cat

Textron Off Road Wildcat XX

Textron Off Road’s Wildcat XX. Wildcat models were previously sold under the Arctic Cat brand.

Textron 2018 Q3 Earnings Results

Textron, Inc recently reported fiscal year 2018 third quarter earnings. They point to a struggling Arctic Cat brand which was acquired in early 2017. The company embedded the Arctic Cat brand under their new Textron Off Road brand in their Specialized Vehicle business, which is part of their Industrial segment. Specialized Vehicles also includes E-Z-GO golf cars, Cushman utility vehicles, towing tugs among other small, task-oriented vehicles. Management reported that poor Specialized Vehicle results hurt the Industrial segment that in turn reduced overall quarterly performance for the company.

Weak Performance but Faith in the Product

The Q&A part of the earnings call pointed to problems with products formerly sold under the Arctic Cat brand. CEO Scott Donnelly remarked that  “…the most fundamental challenge in the business is around particularly the dirt side, the consumer side of that business and that’s the area that where we need the most work”. Furthermore he noted that,

” Industrial, segment profit was breakeven primarily due to unfavorable operating performance in specialized vehicles. Specialized vehicles has undergone significant change over the past two years, as we have expanded the product portfolio. While we’ve seen increasing revenue in the segment, we haven’t seen the planned level of growth or do the operating levers necessary to support the expected returns.”

Nevertheless, management remained positive about future performance and confident of the products they are putting on the market. Donnelly further stated,

“We’ve got great feedback from customers, the performance side we don’t have a product problem I mean we have still gaps which again as I said we’re working on it as we go forward but I think the progress on what the product is and how the product is performing we’re very pleased with.”

The management expects better performance in the fourth quarter.

 

Sales Channel Issues

Additional management comments indicated other issues in the sales channel may be limiting performance. Management noted the need to manage the channel but that some dealers are doing very well. Overall the retail sell through did not meet expectations. Furthermore, management allocated more funds to product discount programs to reduce inventory. In addition, management expressed a desire to improve the sales tools that help customers get to the product.

Pricing Changes Reflect Sales Issues

The pricing changes across the Textron Off-Road vehicle lineup from 2018 to 2019 reflects the poorer than expected retail performance. Management reduced prices for nearly every model, slashing prices for the Wildcat side-by-sides the most. Wildcat price cuts ranged from $500 to $2,500 with most at least $1,000. In contrast, many other manufacturers maintained pricing or slightly increased pricing by around $200 in most cases.

Textron Earnings Call (Seekingalpha.com)

SVR’s Take:

If management likes the product and some dealers are doing well, it sounds like it may possibly be a dealer issue. Either dealers are in the wrong location or they are not performing well. The management’s comments about getting customers to the product raise additional potential issues.

“I think in general how we manage that channel is something that frankly we just haven’t done as well as we should have. And our sales tools and how easy we make it for perspective customers to figure our product, have access to the dealers, have a natural way to help customers move to our product is just something we didn’t do well.”

This could cover a lot of ground from advertising to website performance to in-store marketing material to how dealership personnel interact with customers from first contact to sale.

Marc Cesare, SVR

Polaris 2019 Ranger Crew XP 1000 Reviews

Polaris 2019 Ranger Crew XP 1000 EPS

The 2019 Ranger Crew XP 1000 EPS in Sunset Red Metallic from Polaris.

2019 Ranger Crew XP 1000 Overview

The six-passenger  2019 Ranger Crew XP 1000 from Polaris features a number of improvements compared to the 2018 version including more power, ground clearance, towing capacity and larger tires. The Sage Green base model starts at $16,299 and there are four models in the lineup including a Premium model with automotive paint, a 20th Anniversary Limited Edition with special paint scheme and stitched seats, the Northstar Edition with a full HVAC cab and a High Lifter Edition for mud riding. Some of the key features and specs of the 2019 Ranger Crew XP 1000 include:

  • 82 hp engine
  • High Performance On-Demand True AWD/2WD/VersaTrac Turf Mode
  • Engine braking system
  • Electronic power steering
  • 27″ Maxxis tires on aluminum Black Xcelerator 2.0 wheels
  • 11″ of front and rear suspension travel
  • 13″ of ground clearance
  • 1,000 lbs capacity cargo bed
  • 2,500 lbs towing capacity
  • 4-Wheel Hydraulic Disc with Dual-Bore Front Calipers
  • Under seat storage and pass through for longer items
  • New front fascia design

Reviews Summary

These reviews focus on the base and Premium model with some owner added options as noted. In general, the reviews are very positive. Owners like the power, ride and storage of this model. The only common issue is that the response of the vehicle on initial take-off can be “jerky”. The first two videos discuss some of the key features of the vehicles and are from dealers. Actual owners with time on the machines made the latter two and are more informative.

Vehicle Walk Arounds

Video walk around of the 2019 Ranger Crew XP 1000 by Family PowerSports in Lubbock, TX provides a nice overview of key changes from 2018 model. These changes include:

  • New front fascia
  • Increase ground clearance from 11″ to 13″
  • 26″ stock tires to 27″ 6-ply tires
  • Increased horsepower from 80 to 82
  • Increase towing capacity from 2,000 lbs to 2,500 lbs
  • Widened front and rear entries for easier ingress and egress
  • 25% thicker seats for more comfort
  • Cleaner dash design
  • Added storage under passenger seat

Video walk around of the 2019 Ranger Crew XP 1000 by Leone Polaris in Peru, IL. This video provides more footage of vehicle specifics but is also a little harder sell. The presenter noted similar changes over the 2018 model as in the video above and added the following:

  • Best crew model on the market
  • 25% tighter turning radius
  • Highest grade tires and wheels
  • Tailgate quality similar to a good pickup truck

Owner Reviews

Video review from owner with the 2019 Ranger Crew XP 1000 EPS Premium

  • First-time UTV owner reviewing after about 800 miles and 75 hours using the vehicle
  • Use the UTV when camping and added front full glass windshield, rear plexiglass window and roof from Polaris and a bluetooth audio system from a third party provider
  • Owner is from South Dakota and used vehicle on gravel roads and farmland
  • Compared to base model this one has different gauge and dashboard along with automotive paint
  • Would have bought full glass rear window instead of plexiglass which probably won’t last that long
  • Love the ride:  “Drives like a Cadillac” and seats are “top notch”
  • Takes bumps and river bottoms really well in front and rear seats
  • Love the look of the front which looks like a pickup truck
  • Crew size is good for family with three boys
  • Lot of room for storage
  • Like the power. Have easily towed trailer with pavers.
  • Don’t like the dust in the cabin even with half windshield we tried from neighbor; Better without windshield but our area has a lot of bugs
  • No grab handle for the driver seat which makes it difficult for older person to enter the vehicle
  • Accessories are extremely expensive e.g. doors would cost $5,000 more
  • Machine is long. You will need a 14 ft. trailer.
  • Commenters responding to the video talked about having a “jerky” initial takeoff. Others suggested this lessened with breaking in of the belt and using lower gear at start.
  • Another commenter noted the “amazing power” of this model

First impression video review by a new owner of the 2019 Ranger Crew XP 1000 in Sage Green which is the base model. The owner drove the vehicle around a duck hunting camp in Alabama checking and pulling game cameras.

  • First time UTV and Polaris owner with a couple of hours of use on the vehicle
  • Added front and rear glass. The Plexiglas option when scratched can be difficult to see through in low light.
  • Sage Model doesn’t have adjustable driver seat and just a digital gauge instead of additional analog gauges.
  • Like the large amount of storage
  • Might put in 1/4 doors up front in contrast to the standard side nets
  • Reached 52 mph top speed
  • Driving in work mode seems to have a smoother throttle response in contrast to the other modes
  • 2″ higher ground clearance is good for use in the water
  • Very happy with it

 

Can-Am Defender XT Reviews

2019 Can Am Defender XT UTV

The 2019 Can Am Defender XT in hyper Silver

Defender XT Overview

The 2019 Can-Am Defender XT is a three-seat utility vehicle priced at $15,799. You can choose to power this model with the 50 hp HD8 or the 72 hp HD10 engine option. In either case, the Defender XT features a PRO-TORQ transmission with Quick Response System and a drive train with a lockable rear differential and Visco-Lok QE auto-locking front differential. This model also has electronic hill descent control, three driving modes and dynamic power steering. The Defender Xt is designed for work primarily and therefore can haul up to 1,000 lbs in the cargo box and tow up to 2,500 lbs. Other features include:

  • Twin Tube Gas Charged Shocks
  • 10″ of front and rear suspension travel
  • 11″ of ground clearance
  • 27″ Maxxis Bighorn 2.0 tires
  • 220mm hydraulic disc brakes
  • 650 W Magneto
  • Winch
  • XT Front Bumper
  • Full HMW Skid Plate
  • Full Hard Roof
  • Adjustable Tilt Steering
  • Multifunction digital/Analog Gauge
  • Available in Hyper Silver, Intense Red or Mossy Oak break-Up country Camo

Reviews

The 2019 models have not been out that long so there aren’t too many reviews available and they aren’t any based on long term usage of the vehicle. However, the reviews are pretty positive. The amount of interior storage the ability to remove some of the storage bins impressed the reviewers. The reviews are complimentary as one focuses more on the drivability of the Defender XT and the other comments more on the interior and usability of the vehicle.

UTVDriver.com -Trail riding with the Defender XT in the Black Hills of South Dakota

  • Vehicle had the more powerful HD10 option
  • Smooth, linear power delivery with no noticeable power loss at 6,500 ft.
  • Normal driving mode is most responsive
  • Comfortable seating for larger driver even after many miles
  • Glove box that doubles as removable tool box and other removable storage is a positive
  • Handled a variety of terrain well including uphill, downhill and fallen trees
  • Feels solid

Fisher’s ATV World – Video review of a Defender DPS HD10 which is basically the same as the Defender XT but without a few extras

  • Quiet ride
  • Do not feel heat from the engine
  • Easy in/Easy out
  • Really like the small turning radius
  • Plenty of storage
  • Can haul and tow a lot

ODES Industries Launches 2019 UTV Lineup

ODES Industries 2019 Dominator X2 LT Zeus

The ODES Industries 2019 Dominator X2 LT Zeus features a touchscreen and LED lighting.

ODES Industries, self-described as a value UTV brand, recently announced their 2019 UTV lineup as they push for even more growth. According to company statements ODEs Industries has been growing for the last several years including a doubling of sales from 2016 to 2017. The 2019 lineup includes 10 models including the new XForce 2 and XForce 4 models which feature an enclosed cab. Probably, these models are aimed at heavy duty work applications in challenging weather environments. Prices range across the lineup from $9,795 up to $23,495.

ODES Industries Dominator Models

The Dominator line includes the following models:

  • The entry level Dominator X2 ST Model V1 – MSRP $9,795
  • The Dominator X2 ST Model V2 – MSRP $9,995 (Adds Doors, OTR Tires and Matte Black Wheels)
  • The premium level Dominator X2 LT Model V1 – MSRP $13,095
  • The top level Dominator X2 LT Zeus Model V1 – MSRP $14,795 (Adds 7″ Full Touchscreen LCD, Heated Seats)
ODES Industries 2019 Dominator X2 ST

The 2019 Dominator X2 ST

The Dominator X2 ST versions have the following features:

  • 800cc Engine
  • Digital Dash Display
  • Full Roof
  • Heavy Duty Front Bumper
  • Full LED Lighting
  • Electronic Dump Bed
  • Rearview Mirrors
  • Door Nets
  • Front 3,500 lbs Winch
  • Towing Hitch
  • 14″ Wheels
  • 26″ Tires
  • Lockable Storage Boxes

The Dominator X2 LT models have the following features:

  • 800cc Engine with 1000cc option for Zeus model
  • Long Travel – Vi-LOCK Suspension
  •  Digital Dash Display
  •  Full Windshield
  •  Full Roof
  •  32″ LED Light Bar
  •  Heavy Duty Front Bumper
  •  Heavy Duty Rear Bumper
  •  Full LED Lighting
  •  Electronic Dump Bed
  •  Rearview Mirrors
  •  Metal Frame Doors
  •  Front 3,500 lbs Winch
  •  Rear 3,500 lbs Winch
  •  Towing Hitch
  •  15″ Wheels
  •  29″ Tires
  •  Lockable Storage Boxes
  •  Radiator Guards
  •  A-Arm Guards
  •  Electronic Power Steering
Also, there are three Dominator X4 models which seat six as a result of stadium style seating. These versions are similar to the two-passenger lineup with a Dominator X4 ST V1($11,295), Dominator X4 LT Zeus V1 ($16,495) and Dominator X4 LT V1 ($14,795).

Sport Model

ODES Industries Ravager LT Zeus

A 1000cc engine powers the sporty Ravager LT Zeus from ODES Industries.

The two-passenger Ravager LT Zeus gives ODES Industries a pure sport model in the lineup. A 1000cc engine powers the Ravager which features a Two Brothers Racing Exhaust, 3M graphics kit, Two Brothers/Dyna Jet Juicebox kit, front winch, 29″ OTR Dirt Master tires and 15″ OTR Matte Black wheels. The company revamped the model for 2019. Ravager LT Zeus features include:

  • 7″ Touchscreen LCD Display
  •  Long Travel – Vi-LOCK Suspension
  •  Full Windshield / Roof
  •  32″ LED Light Bar
  •  Two Brothers Racing Exhaus
  •  Passenger Grab Bar
  •  Cargo Bed
  •  Rearview Mirrors
  •  Metal Frame Doors
  •  Front 3500lbs Winch
  •  Rear Towing Hitch
  •  15″ OTR Matte Black Wheels
  •  OTR Dirt Master 29″ Tires
  •  Radiator Guards
  •  A-Arm Guards
  •  Electronic Power Steering
  •  Heavy Duty Front Bumper
  •  3M Graphics Kit
  •  Powder Coated Bars – Yellow or Blue
  •  Two Brothers / Dyna Jet Juicebox Kit

New XForce Models Feature Cabs

ODEs Industries XForce 4

ODES Industries added a cab to their latest offering, the Force 4, which seats six.

Finally, rounding out the lineup are the two newest models from ODES Industries, the XForce 2 priced at $20,995  and the XForce 4 priced at $23,495. The X2 can seat up to three and the X4 up to six. Both feature AC/Heating systems, heated front seats, 10.6″ LCD touch screen and a 1000cc engine. Standard features include new mapping, GoPro integration, front and rear camera options, temperature controls, digital displays, Bluetooth connection for phone and text display and direct screen audio control. The latter feature makes it easier to just ride rather than play with electronics.

  • Integrated Media w/ Bluetooth and USB
  • Onboard GPS Nav with Trail Tracking
  • Front and Rear 640×480 Cameras
  • In Screen Go Pro Integration
  • ODES Ultra LCD Integrated Software
  • Aluminum RollcageAC and Heat System w/ Fan Control
  • Onboard Generator for Power Support
  • Front Glass Window w/ Wiper System
  • Front Window Adjustment, 3 Settings
  • Glass Door Windows w/ Electric up/down
  • Single Row LED Directional Light Bar
  • Full Enclosure System
  • Interior Lighting
  • 3 Captains Chair Seating
  • Heated Driver and Passenger Seats
  • Fold Down Center Seat for Console Storage
  • Folding Aluminum Dump Bed
  • 800LBS Capacity Electric Dump Bed
  • Exterior Rear Working Light
  • Oversized Side Mirrors
  • Aluminum A-Arm Guards
  • 16 Gallon Gas Tank
  • 4500LBS Wireless Winch w/ Nylon Rope
  • Reversible Front to Rear Winch Hitch w/ 2″ Ball
  • Winch wire quick disconnects
  • Snorkeled CVT Air Intake System
  • Exterior Panel Light and Bed Controls
  • LED Front and Rear Lights
  • OTR Dirt Master Tires 28×10-14
  • OTR Steel Wheels
  • Interstate Battery
  • Royal Purple Ice Coolant
  • Stage 4 Made in USA Kevlar CVT Belt
  • Double Wishbone Independent Suspension
  • Ground Clearance of 327mm
  • Aluminum Box 1076x1561x260

Learn more:  Odesindustries.com

SVR’s Take:

ODES Industries is another value brand that appears to be having success offering solid features at a reasonable price. These brands typically have a starting price point in the $9,000 to $10,000 range for their entry level UTV, although some start even lower with fewer features. According to ODES Industries website, they source parts from around the world and partially assemble vehicles in Asia. The remaining assembly appears to be in the US. The company moved assembly from California to Dallas, TX in 2016.

Caterpillar Adds 5-Seat UTVs

Caterpillar CUV105 D

The 5-passenger diesel powered CUV105D is a new addition to the Caterpillar UTV lineup.

Caterpillar’s new 5-passenger CUV85 is gas powered.

Caterpillar recently expanded their utility vehicle lineup with the 5-seat CUV85 and CUV105 D models in order to add a crew-sized offering. The CUV85 is gas powered and the CUV105 D is diesel powered because of the need to meet the diverse fuel options of their target market. The expansion is a follow up to their entry into the UTV market earlier in 2018 with the CUV82 and CUV102 D two-person models. As a result, the lineup now includes four models. Textron is manufacturing the new models under a partnership agreement with Caterpillar.

Key Caterpillar UTV Features

The two latest models have a 1,000 lbs rear cargo bed capacity and can tow up to 2,000 lbs in order to meet the rigors of heavy duty work applications. The CUV85 features a 50 hp, 3-cylinder gas engine with a 45 mph top speed. In contrast, the CUV105 D is powered by a 25 hp, 3-cyclinder diesel engine and has a 25 mph top speed. The CUV85 comes with quarter doors, probably due to the higher vehicle speed. Common features across both models include:

  • 5-passenger capacity
  • 2WD/4WD/Electric Rear Locking Differential
  • CVT transmission
  • 10.5″ of ground clearance
  • Four-wheel independent A-arm suspension with front sway bar
  • Electric assist power steering
  • Single and dual piston disc brakes
  • ROPS
  • 25″ tires on steel wheels
  • Steel cargo bed
  • Digital gauge
  • Halogen headlights
  • Dual LED taillights
  • Adjustable tilt steering
  • Adjustable driver’s seat

Additional Features

Furthermore, Caterpillar marketing material points to specifc features designed for work use including a steel cargo bed, smooth acceleration, clear sight lines and engine braking. Additional features in order to produce quiet and comfortable operation include a design to minimize noise and vibration, ample head, elbow and leg room, and removable passenger seat base. Likewise easy access points facilitates maintenance and advanced diagnostics reduce troubleshooting time.

Learn more:  Constructionequipment.com

SVR’s Take:  Similar to other manufacturers, Caterpillar has expanded their product line with the addition of crew-sized models. In contrast to some models on the market, these are pretty basic vehicles but with solid features which are appropriate for the work applications they are targeting. If Caterpillar is successful with this lineup they will likely continue to introduce new models.

Can-Am Market Share Increases

2019 Can-Am Defender HD8

New models like the 2019 Can-Am Defender HD8 help increase Can-Am market share.

Can Am Defender Max

Can Am Defender Max

BRP Reports Strong Fiscal Q2 Earnings  

BRP Inc., manufacturer of Can-Am vehicles announced strong earnings for their fiscal second quarter (ending July 31, 2018) and improved Can-Am market share for their side-by-side business. Management reported an increase in revenue of 18% to $1,207 million from $1,023 million (In Canadian $) as well as increased profit margins.

Ahead of Strategic Plan 

Since implementing their strategic plan in 2015 Can-Am has steadily made inroads in the side-by-side market. Management set the goal of doubling Can-Am market share for the North American side-by-side market from approximately 10% to 20% by 2020. They are on track to reach that goal in 2019 instead of the original 2020 target year.

Recent Can-Am UTV Launches Source: Can-Am Presentation 9/10/2018

Product Development Drives Can-Am Market Share Success

The company drove this rapid growth by launching a host of new models to maintain competitiveness in existing market segments or to enter new segments. They typically launch new models every six months. The Defender lineup of UTVs is an example of entering new segments. The Defender not only attacked the work/utility segment where Can-Am needed a presence, but opened up under represented geographic markets. The company reports US side-by-side dealer network coverage increased over 50% over four years. They also added trail and sport models for the recreational segment while continuing to produce competitive high-end performance side-by-sides as well.

Can-Am Emerges as Main Polaris Competitor

While still far from the market share of market leader Polaris, Can-Am has established itself as the main competitor to Polaris, outpacing the likes of Yamaha, Honda, John Deere and others. This applies to not only to the side-by-side market but in other product segments as well including ATVs, 3-wheelers and snowmobiles. Both companies have also entered the boating market with recent acquisitions. (BRP; Polaris) Can-Am is one of the few side-by-side manufacturers that comes close to the breadth of models that Polaris offers across all the market sub-segments. Management’s intentions are to continue to build out their product lineup.

Earnings Call Highlights

The following are highlights from the earnings call and presentation. Unless noted comparisons are to the same quarter of the previous year.

  • Revenues were up in North America (NA) and all intl markets
  • NA retail sales for Seasonal and Year-round business segments increased 16%
  • All product segments are outgrowing respective industries
  • Year Round business which includes SxS, ATV and Spyder products increased by 26% from $440.4 to $554.0
  • NA side-by-side retail jumped low 30% vs. low teen % for industry for the quarter
  • NA 2018 SSV industry up high single digits percent for recently ended model year while Can-Am jumped mid 30%
  • Management reports gaining over 2.5% in market share in NA side-by-side market for the 2018 season
  • Can-Am SxS up 25% in all  international markets:  Europe/Middle East, Latin America and Asia-Pacific.
  • Management states:  “We are seeing solid growth across the lineup, and the popularity of our specialized models such as the Defender LONE STAR, the Maverick X3 rock crawler and our mud-ready Maverick X3 and Defender is helping us deliver superior profitability for us and our dealers.
  • Management increased guidance for Year Round business to up 18-21% from previously guided 12-15%
  • Can-Am has more than doubled their side-by-side retail volume since 2015 with 6 new platform introduced over the past 3 years and on target to reach 2020 goals one year in advance
  • Room to grow in the Defender side-by-side segment
  • Some cost pressures from commodity prices and freight costs

Learn more:  Earnings Call Transcript

Polaris Recalls RZR XP Turbo S UTVs

RZR XP Turbo S

Polaris is recalling RZR XP Turbo S models due to an issue with the ROPS.

Polaris is recalling 2018 RZR XP Turbo S UTVs because the rollover protection structure can fracture during a high-speed rollover. The recall involved approximately 1,300 vehicles. Owners reported six instances of the ROPS fracturing. Owner should immediately stop using the vehicles and contact a Polaris dealer for a free repair.

SVR’s Take:  The recall is relatively small compared to typical recalls, and considering the number of vehicles Polaris sells. However, this is the first time I remember an issue with a ROPS structure for any manufacturer. In addition, Polaris mostly likely manufactured these 2018 models under their new design and manufacturing processes implemented to produce better quality vehicles. SVR maintains a list of recent recalls of UTVs, golf cars and LSVs. The following recall information is from the Consumer Protection Safety Commission.

Name of product:  Model year 2018 RZR XP Turbo S recreational off-highway vehicles (ROVs)

Hazard:  In the event of a high-speed rollover, the vehicle’s rollover protection structure (ROPS) can fracture, providing inadequate protection during a rollover.
Remedy:  Repair
Recall date:  August 27, 2018
Units:  About 1,300
Consumer Contact:  Polaris at 800-765-2747 from 7 a.m. to 7 p.m. CT Monday through Friday or online at www.polaris.com and click on “Off Road Safety Recalls” for more information. In addition, check your vehicle identification number (VIN) on the “Product Safety Recalls” page to see if your vehicle is included in any recalls.

RZR XP Turbo S Recall Details

Description:  This recall involves model year 2018 RZR XP Turbo S recreational off-highway vehicles (ROVs) sold in red and blue. The recalled vehicles have “POLARIS” printed on the front grille, “POLARIS” printed beneath the doors, and “RZR” printed on the rear fenders. The vehicle identification number (VIN) and model number can be found on a label affixed to the vehicle frame in the left front wheel well.
Polaris Model Year 2018 RZR XP Turbo S
Year Model Number Model/Color
2018 Z18VEL92BR RZR XP TURBO S WITH RIDE CMD AND LV INDY RED
2018 Z18VEL92BK RZR XP TURBO S WITH RIDE CMD AND LV POL BLUE
Remedy:  Consumers should immediately stop using the recalled ROVs and contact a Polaris dealer to schedule a free repair. Polaris is contacting all registered owners directly.
Incidents/Injuries:  Polaris has received six reports of rollover protection structures fracturing during rollovers. Polaris has received one report of an injury but does not attribute it to ROPS fractures.
Sold At:  Polaris dealers nationwide from January 2018 through August 2018 for about $27,500.
Manufacturer(s):  Polaris Industries Inc., of Medina, Minn
Importer(s):  Polaris Industries Inc., of Medina, Minn
Manufactured In:  Mexico
Recall number:  18-762

American Landmaster Recalls UTVs

LandMaster Crossroad

American Landmaster is recalling Crossroad UTVs because of a potential gas leak.

Landmaster Landstar utility vehicle

Landstar models are part of the recall.

Landmaster Trailwagon models are also part of the recall.

American Landmaster has recalled approximately 1,500 model year 2018 UTVs including Landstar, Crossroad and Trailwagon models due to a potential gas leak from the vehicle’s gas tank which can potentially create a fire and burn hazard. Owners have not reported any injuries related to this recall. Owners should immediately stop using the vehicles and contact their American Landmaster for a free repair. The recall information below is from the Consumer Product Safety Commission. SVR maintains an ongoing list of recalls related to utility vehicles, golf cars and LSVs with links to detailed recall information.

Name of product:  Off-road utility vehicles
Hazard:  Gas can leak from the utility vehicle’s gas tank, posing fire and burn hazards.
Remedy:  Repair
Recall date:  August 23, 2018
Units:  About 1,500
Consumer Contact:  American Landmaster at 800-643-7332 from 8 a.m. to 5 p.m. ET Monday through Friday, email at recall@AmericanLandmaster.com or online at www.AmericanLandmaster.com and click on the “Notice to UTV Owners Important Recall Information” icon or www.AmericanLandmaster.com/recall for more information.

American LandMaster Recall Details

Description:  This recall involves model year 2018 gasoline-powered Landstar, Crossroad and Trailwagon models of American Landmaster four-wheel off-road utility vehicles. The recalled vehicles were sold in a variety of colors. The model name and number are printed on the hood of each front fender. The American Landmaster logo is printed on the center of the hood of the vehicle. The VIN is located behind the pedals and below the steering wheel.

Model Number

VIN range start

VIN range end

CR350, LS350, LS350DL

A4PUTYFB1JBA00023

A4PUTYFB9JBA00304

A4PUTYFB1JBA00751

A4PUTYFB7JBA00754

LS450

A4PUTYJC4JBA00422

A4PUTYJC6JBA00499

A4PUTYJC3JBA00749

A4PUTYJCXJBA01512

TW450

A4PUTYJCXJBA00358

A4PUTYJC0JBA00496

A4PUTYJC2JBA00760

A4PUTYJC2JBA01147

TW750

A4PUTYPD0JBA00014

A4PUTYPD8JBB00149

LS477

A4PUVTKD7JBB00003

A4PUVTKD9JBB00049

LS550

A4PUTVKD9JBA00003

A4PUTVKD9JBA00308

LS670, 677EFI, 677EPS

A4PUTYPD6JBB00005

A4PUTYPD7JBB00224

Crew2, Crew4, Crew4X

A4PUFYPD0JBA00005

A4PUFYPD5JBA00078

Remedy:  Consumers should immediately stop using the recalled vehicles and contact American Landmaster for a free repair.
Incidents/Injuries:  None reported
Sold At:  Atwood Distributing, Tractor Supply Company, Orscheln Farm and Home stores and other distributors nationwide from January 2018 through July 2018 for between $4,300 and $10,300.
Manufacturer(s):  ASW, LLC d/b/a American Landmaster, of Columbia City, Ind.
Manufactured In:  U.S.
Recall number:  18-207

Polaris Recalls Gravely Atlas UTVs

Name of product:  Gravely Atlas JSV 3000 and 6000 utility vehicles
Hazard:  The utility vehicle’s exhaust header pipe can crack, posing fire and burn hazards.
Remedy:  Repair
Recall date:  August 8, 2018
Units:  About 2,100
Consumer Contact:  Gravely at 877-740-7060 from 8 a.m. to 4:30 p.m. ET Monday through Friday or online at www.gravely.com and click on the Product Support link at the bottom of the page, then select Product Safety Recall in the menu on the left of the page for more information.

Recall Details

Description:  This recall involves all model year 2015 through 2018 Gravely Atlas JSV 3000 and 6000 gas-engine-powered utility vehicles. The recalled utility vehicles were sold in red and have one or two rows of seats and a rear box. “Gravely” is printed on the rear box, and “Atlas” is printed on the hood of the utility vehicle. The model and serial number can be found on the driver’s side and are visible from the front wheel well. The following model numbers and serial number ranges are being recalled:

Year

Model

Serial Number Range

2015

996200 Base

150100, 150102 – 150299, 150310, 150321, 150332, 150343, 150354, 150365, 150376, 150387, 150398, 150409 – 150771, 150774 – 150803 and

150805 – 151173

996201 Crew

150100 – 150299, 150310, 150321, 150332, 150343, 150354, 150365, 150376, 150387, 150398, 150409 – 150599 and 150601 – 150641

2016

996200 Base

160100 – 160299, 160310, 160321, 160332, 160343, 160354, 160365, 160376, 160387, 160398 and 160409 – 160640

996201 Crew

160100 and 160102 – 160112

2017

996200 Base

170100 – 170256

996201 Crew

170100 – 170102 and 170108 – 170152

2018

996200 Base

180101, 180105 – 180116, 180118 – 180136, 180138 – 180149, 180151 – 180154, 180158 – 180161, 180163 – 180166, 180168 – 180170, 180172,

180174 – 180178, 180181 – 180182, 180186 – 180187, 180190, 180192, 180199, 180202, 180205 – 180206, 180209 – 180211, 180214 – 180215, 180218 and 180220 – 180222

Remedy:  Consumers should contact an authorized Gravely dealer for a free repair. If the exhaust system becomes noisier, consumers should immediately stop using the recalled utility vehicles. Gravely is contacting all known purchasers directly.
Incidents/Injuries:  Gravely has received seven reports of cracked header exhaust pipes. No injuries have been reported.
Sold At:  Gravely dealers nationwide from September 2014 through July 2018 for between $13,000 and $15,700.
Manufacturer(s):  Polaris Industries Inc., of Medina, Minn.
Distributor(s):  Gravely Company, of Brillion, Wis.
Manufactured In:  United States
Recall number:  18-758