Polaris Reports 2016 Third Quarter Results. Motorcycle Retail Sales Up High Single Digits. ORV Down High Single Digits.

polaris3Overall sales for the third quarter of 2016 totaled $1,185.1 million, down 19 percent from last year’s third quarter sales of $1,456.0 million.

“Our third quarter results, while discouraging, were in line with our revised guidance and reflect our ongoing execution of the RZR® recalls and significant quality and safety improvement initiatives. During the past three months, we have accelerated our efforts to get our loyal owners back to riding safely, and are now over 50 percent complete with the RZR® 900/1000 recalls and slightly below 50 percent on the more recent RZR® Turbo recall notice.

polaris1In addition to these recall challenges, we continued to face a weak overall Powersports industry, but were encouraged by continued retail strength for Indian and our overall motorcycle business, and the return to growth for side-by-sides in September,” commented Scott Wine, Polaris’ Chairman and Chief Executive Officer.

Third Quarter Segment Results (in thousands). Includes respective parts, garments and accessories (“PG&A”) related sales

polaris2Motorcycle segment sales, including its respective PG&A sales, decreased three percent in the 2016 third quarter to $183.2 million. Victory® and Indian® motorcycles reported increased vehicle sales growth, while Slingshot® sales were down during the quarter due to shipment timing. Gross profit decreased 26 percent to $21.2 million, or 11.6 percent of sales in the third quarter of 2016, compared to $28.4 million, or 15.1 percent of sales, in the third quarter of 2015 due to higher warranty expense related to recent safety and service bulletins, primarily for Slingshot®.

polaris4North American consumer retail demand for the Polaris motorcycle segment, including Victory®, Indian Motorcycle® and Slingshot®, increased high-single digits percent during the 2016 third quarter with Indian Motorcycle® and Victory® increasing low-teens percent combined, while overall motorcycle industry retail sales 900cc and above was down high-single digits percent in the 2016 third quarter.

Off-Road Vehicle (“ORV”) and Snowmobile segment sales, including its respective PG&A sales, decreased 23 percent from the third quarter of 2015 to $923.4 million. Gross profit decreased 40 percent to $231.3 million, or 25.1 percent of sales, in the third quarter of 2016, compared to $388.5 million, or 32.6 percent of sales, in the third quarter of 2015 due to higher warranty costs related to recent recall activity primarily for the Company’s RZR® vehicles.

Parts, Garments, and Accessories (“PG&A”) sales, which are included in each of the three respective reporting segments, declined one percent during the 2016 third quarter to $224.4 million driven by lower retail sales.

International sales to customers outside of North America totaled $141.0 million for the third quarter of 2016, including PG&A, a decrease of eight percent from the same period in 2015. International sales on a constant currency basis were down seven percent in the 2016 third quarter.

2016 Business Outlook
For the full year 2016, the Company is narrowing its earnings guidance range to $3.40 to $3.60 per diluted share with sales expected to be down in the mid- to high-single digit percent range.

14 Responses to “Polaris Reports 2016 Third Quarter Results. Motorcycle Retail Sales Up High Single Digits. ORV Down High Single Digits.”

  1. 1 Woody's Oct 25th, 2016 at 11:42 am

    Good numbers overall, would like to see motorcycle sales by brand and unit, though. Does, “encouraged by continued retail strength for Indian and our overall motorcycle business” indicate that, ” Victory® and Indian® motorcycles reported increased vehicle sales growth” could mean that Victory actually went down but the combines number went up based on Indian growth? That would be a big story in itself.

  2. 2 Paul Reynard Oct 25th, 2016 at 11:44 am

    Woody’s. Not sure, but I would Victory is down and Indian way up.

  3. 3 BobS Oct 25th, 2016 at 12:18 pm

    Victory and Indian both up, Slingshot down. It’s in the report.

  4. 4 Woody's Oct 25th, 2016 at 1:25 pm

    Thx BobS. Do you mean the report from Polaris or this article? The article keeps lumping Indian & Victory together, from how I read it but maybe I’m reading it wrong. Seems contradictory in two parts of the article. That would be good numbers indeed if they were both up individually while H-D went down.

  5. 5 BobS Oct 25th, 2016 at 1:47 pm

    From the article (and report) Vic and Indian were singled out for unit sales increases while Slingshot was singled out for unit sales decrease. Gross profit was down (but still profitable) for the motorcycle division but this was blamed on a Slingshot recall.

  6. 6 Woody's Oct 25th, 2016 at 5:06 pm

    Thx Bob, what was the separate % increase for Victory and Indian?

  7. 7 SIGFREED Oct 25th, 2016 at 9:19 pm

    Just to put matters in perspective:

    2015: HD revenue ~ $5.3 BN vs Polaris motorcycles ~ $0.5 BN.

    Clinical fact: Polaris motorcycle sales are growing at a steady pace, but at ~ 10% of HD, not exactly flooding the freeways with a red tsunami.

    I say: Polaris motorcycles are not bad, if you like something different take a Victory (the Gunner is big bang for the buck and actually the revised look cruiser range is starting to look attractive – eg revised headlight etc), or could not care for a fake legacy take a Polaris Scout, -Chief, etc (a lot of motorcycle for the price).

    I suspect Polaris will have to start to trim a bit in the future and you may well be getting the most value as matters stand – while they are still keen to claw into a more respectable market share.

  8. 8 Jerrman Oct 26th, 2016 at 11:27 am

    Polaris is still benefitting from the newness and somewhat uniqueness of their motorcycles but there’s only a limit to their inroads if they continue to follow HD in types of bikes and audience. I believe they need to further expand their appeal with production variations of the FTR750, possibly a cafe racer and/or a bobber type motorcycle. If the FTR750 does well at the track, they may have found a way into these other segments that would be based on Indian’s heritage as a flat track racer combined with the technologies of today. Moto Guzzi, BMW and now Triumph (with their just introduced Bobber) are tapping into this market in a big way and these bikes are very appealing to a younger, less touring interested rider who wants lighter, cheaper and more responsive motorcycles for city and commuting.

  9. 9 takehikes Oct 26th, 2016 at 6:13 pm

    Every one they sell comes out of HD’s hide. Good for them.

  10. 10 Blackmax Oct 26th, 2016 at 6:28 pm

    Everything takes a downturn sometime !!
    Growth for Indian (expected) & Victory (not expected)
    & as said, maybe because they’re both lumped together …
    Slingshot is down, but it is a novelty item that is going to ebb & flow.
    the thing that gets me is where are the upgrades ??
    H-D is coming to the plate with a new engine & suspension
    What is Polaris going to respond with ?
    Especially with the Victory line….
    The entire Cross Country touring line (which is their biggest seller) is in serious need of an
    engine / powertrain upgrade & also a fairing redesign that will allow a very needed upgrade
    to the way the stereo looks & functions !!!
    If they can stick a “Ride Command” in a Polaris 4×4,
    I’m sure they could find a way to fit it into a Victory Cross bike.
    the Indians will do just fine on their own, but could use a bump in displacement to
    “keep Up with the Joneses” !!!

  11. 11 Highrider Oct 26th, 2016 at 7:09 pm

    The thing I find ( as a current Victory Owner – Jackpot) is that Polaris, Really needs to use some better imagination into their color choices of their bikes, ” Loud” is being too kind and as my wife said ” I will not be caught on those ” Circus Wagons”
    2. The exhaust needs to ( hate to say it) by be changed to get a better sound. Harley beats them dead on this point alone.
    3. Better advertising, Look at HD pushing the same entry Sportster with new remakes every year and yet what has Polaris done really to get the Vegas noticed ( which is a superior bike to the Sportster IMHO)

    I like the style of their bikes, but a better paint scheme is really not all that hard, but they rather copy previous year’s designs and just change the colors.

    Hopefully 2018 brings a bigger motor for the Baggers and a up to date fairing package, GPS etc!
    The Magnum especially needs to have accessories to accommodate a passenger and not butcher the custom look

  12. 12 Zenaldo Oct 30th, 2016 at 4:27 pm

    Looks like HD’s bike sales numbers aren’t the only ones whose are down for this year overall compared to last years…Polaris is down as well…seems to be a market trend & not a certain manufacturer trend…Milwaukee shouldn’t feel to bad either…

  13. 13 Bigwagon Oct 31st, 2016 at 10:39 am

    Quads and side by sides are the cash cow funding motorcycles. When those sales are hurting, they will need to stem the bleeding and reinvest in that part of the business, which means less money to spend on R&D and marketing for the relatively small percentage of the overall business represented by MCs.

  14. 14 Sh0ps Nov 9th, 2016 at 7:33 am

    I ride a Victory Vision. This bike is a little different which is why bought it. I would love to get something newer myself but Polaris seems to have all but but there eggs into Indian. It is sad to see that there first born is shoved in the back corner of the new “Eagle Riders” franchise as if they are being discontinued. These bikes have virtually remained unchanged other than paint since their introduction. I have had no reason to by another bike at this point. The Vision still turns heads however, I’d like to see what the next step is. It is really hard to beat the comfort of this bike in my opinion. Polaris has become stagnant with all of its Victory bikes. It amazes me that they have the luxury of having 2 great motorcycle lines and the one based on the past slingshots past the one based on the future in technology. Shocking! 😳

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Cyril Huze