American Motorcycle Dealer AMD 172 November 2013 | Page 12

Polaris reports sales growth of 25 percent
OLARIS Industries, the
parent company of both
Victory Motorcycles and
Indian Motorcycles, has reported
record third quarter net income
of $116.9 million, or $1.64 per
diluted share, for the quarter
ended September 30, 2013.
The figures are up 24 percent and
23 percent, respectively, from the prior
year’s third quarter net income of
$94.3 million, or $1.33 per diluted
share. Sales for the third quarter 2013
totaled a record $1,102.6 million,
which represents an increase of 25
percent over last year’s third quarter
sales of $879.9 million.
Scott Wine, Polaris’ Chairman and
CEO, said: “Our record third quarter
results reflect both the ongoing
demand for our existing products and
the potential contained within the
initial shipments of our model year
2014 vehicles, the largest new product
introduction in the Company’s history.
In the third quarter, we launched more
new vehicles than in any previous
model year, led by the much
anticipated debut of Indian
Motorcycles along with several
innovative variants of Rangers, RZRs
ATVs and Victory motorcycles.
dditionally, to complement and
enhance our consumers’
experience with these vehicles our
PG&A business introduced over 300
new model year 2014 accessories plus
an expanded apparel line-up. While
the new model year 2014 vehicles and
accessories are just now arriving at
dealers in meaningful quantities, the
initial feedback has been extremely
positive from consumers to the trade
magazines. To receive such accolades
is alw ays gratifying, but we realize that
we must remain focused on achieving
the full market potential of these
recently released new products while
continuing to develop the next wave
of industry leading products.”

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Wine added, “Though much of our
effort was focused on successful
product launches, we also achieved a
number of financial milestones during
the 2013 third quarter, including
eclipsing the quarterly $1 billion sales
mark for the first time in Polaris’
history. Our international business
performed exceptionally well, up 38
percent during the quarter despite a
weak economic environment. Part of
the international growth came from
our most recent acquisition, Aixam
Mega, an important addition to our
expanding Small Vehicles portfolio.”
ales for the Motorcycles division,
which includes both Victory and
Indian motorcycle sales, decreased six
percent to $49.4 million in the 2013
third quarter compared to the same
period last year. The decrease in the
2013 third quarter sales is due to
Victory dealers continuing to calibrate
their inventory levels under the new
‘Retail Flow Management’ order
taking process, which closely ties
dealer shipments with retail sales, and
weaker international motorcycle sales,
partially offset by a limited number of
model year 2014 Indian motorcycles
that began shipping late in the quarter.
Victory North American consumer
unit retail sales were strong for the
2013 third quarter, increasing over 30
percent compared to a year ago. The
overall Industry performed well also, as
North American industry heavyweight

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cruiser and touring motorcycle retail
sales increased about 20 percent
during the 2013 third quarter as
compared to the prior year’s third
quarter.
The much anticipated re-launch of
Indian Motorcycle occurred during the
2013 third quarter with the
introduction of three all-new model
year 2014 Indian Chief models: the
Chief Classic, Chief Vintage, and the
Chieftain. North American motorcycle
dealer inventory increased slightly
over 2012 levels due to an increase in
the Victory dealer count and initial
shipments of Indian motorcycles.
ross profit across Polaris
Industries was 30.4 percent of
sales for the third quarter of 2013, an
increase of 90 basis points from the
2012 third quarter. Gross profit dollars
increased 29 percent to $334.8 million
for the third quarter of 2013,
compared to $259.8 million for the
third quarter of 2012. The increase in
gross profit, both in terms of absolute
dollars and as a percentage of sales,
primarily arose from continued
product cost reduction efforts and
higher selling prices, offset somewhat
by higher promotional costs.
Operating expenses for the third
quarter of 2013 increased 31 percent
to $165.2 million compared to $126.4

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million for the third quarter of 2012.
Operating expenses in the third
quarter of 2013 increased primarily
due to higher sales and marketing
costs related, in part, to the Indian
Motorcycle re-launch.
ncome from financial services
increased 42 percent to $11.7
million during the third quarter of
2013 compared to $8.2 million in the
third quarter of 2012, due to increased
profitability generated from the retail
credit portfolios with Sheffield, GE and
Capital One and higher income from
the dealer inventory financing through
Polaris Acceptance.
Equity in loss of affiliates was $0.6
million for the third quarter 2013,
which represents the Company’s
portion of the start-up costs related to
the Polaris/Eicher joint venture in India
established in 2012.
Other income, net was $2.6 million
in the third quarter of 2013, compared
to $4.0 million in the third quarter of
2012. The income generated in the
third quarter in both 2013 and 2012
came as a result of foreign currency
exchange rate movements and the
resulting effects on foreign currency
transactions related to the Company’s
foreign subsidiaries.

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www.polarisindustries.com

Third Quarter Performance Summary (in thousands except per share data)
Three Months ended September 30
Product line sales
Motorcycles
Total Sales
Gross profit

Nine Months ended September 30

2013

2012

Change

2013

2012

Change

49,372

52,384

-6%

151,041

160,395

-6%

$1,102,649

$879,939

+25%

$2,693,358

$2,309,135

+17%

$334,785

$259,785

+29%

$803,771

$671,497

+20%

Operating expenses

$165,163

$126,445

+31%

$428,202

$351,574

+22%

Operating income

$181,293

$141,567

+2%

$408,816

$343,548

+19%

Net income

$116,921

$94,345

+2%

$272,389

$224,246

+21%