American Motorcycle Dealer AMD 242 September 2019 | Page 21

Polaris' motorcycles segment sales,
including PG&A, totaled $197 million,
up +15 percent compared to the
second quarter of 2018, driven by
strength in Indian sales, particularly
the new FTR1200 motorcycle, which
began shipping globally in the second
quarter, offset by declines in Slingshot
sales. Gross profit for the second
quarter of 2019 was $27m compared
to $25m in the second quarter of
2018. The increase in gross profit was
primarily the result of higher volume
mostly offset by increased tariff costs.
North American consumer retail sales
for the Polaris Indian motorcycles
decreased high-single digits percent
during the second quarter of 2019 in
a weak mid to heavyweight two-wheel
motorcycle industry that was down
low double digits percent. Indian
outperformed the market with modest
market share gains in North America
during the quarter, driven by retail
sales of its new mid-size bike, the race-
inspired FTR1200, which has
experienced strong initial demand
both in North America and
internationally.
North American consumer retail sales
for Polaris' motorcycles segment,
including both Indian Motorcycles and
Slingshot, decreased mid-teens
percent during the second quarter of
2019, while the North American
motorcycle industry retail sales for mid
to heavyweight motorcycles, including
three-wheel vehicles, was down mid-
single digits percent in the second
quarter of 2019.
"Our second quarter results reflect the
deft leadership and disciplined
execution of our Polaris team. We
worked diligently to overcome the
impacts of tariffs, a very wet spring and
an aggressive promotional
environment, delivering financial
results slightly favorable to
expectations, but trailing our long-
term performance goals," said Scott
Wine, Chairman and Chief Executive
Officer of Polaris Industries Inc.
"The strength of our industry-leading
brands and vehicles enabled us to gain
share in Indian Motorcycles and drive
growth in Side-by-Sides with RANGER
and RZR, although our decision to
assume price leadership did impact
volume, specifically in our lower
margin youth and value segments.
"We are encouraged by our market
share gains and year-to-date growth
in Boats, as well as the continued
improvement at TAP, where retail store
www.AMDchampionship.com
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands US $)
Sales
Cost of sales
Gross profit
Operating expenses:
Selling and marketing
Research and development
General and administrative
Total operating expenses
Income from financial services
Operating income
Net income
Diluted Net income per share:
Three months ended June 30
Six months ended June 30
2019
1,779,315
1,342,867
436,448 2018
1,502,532
1,117,356
385,176 2019
3,275,005
2,486,109
788,896 2018
2,800,005
2,091,348
708,657
140,603
76,379
104,090
321,072
19,746
135,122
88,263 122,859
68,330
92,874
284,063
21,344
122,457
92,540 269,862
143,499
197,028
610,389
38,551
217,058
136,641 240,566
133,560
171,567
545,693
42,769
205,733
148,254
$1.42 $1.43 $2.20 $2.28
sales growth was up nicely. Our
operational and dealer fundamentals
are in good shape as we head into the
critically important model year 2020
product introductions, and we
anticipate improved retail
performance during the second half of
the year."
North American Side-by-Side retail
sales increased low-single digits
percent for the quarter compared to
last year; Indian retail sales were down
high-single digits percent,
outperforming the industry and
gaining share in an extremely
challenging market.
Polaris has reported second quarter
2019 net income of $88m, or $1.42
per diluted share, compared with net
income of $93m, or $1.43 per diluted
share, for the 2018 second quarter.
Adjusted net income for the quarter
ended June 30, 2019 was $107m, or
$1.73 per diluted share compared to
$115m, or $1.77 per diluted share, in
the 2018 second quarter.
Gross profit increased +13% to
$436m for the second quarter of 2019
from $385m in the second quarter of
2018. Reported gross profit margin
was 24.5% of sales for the second
quarter of 2019 compared to 25.6%
of sales for the second quarter of
2018. Gross profit for the second
quarter of 2019 includes the negative
impact of $7m of restructuring and
realignment costs. Excluding these
costs, second quarter 2019 adjusted
gross profit was $443m, or 24.9% of
adjusted sales.
ORV wholegood sales for the second
quarter of 2019 increased 4 percent
primarily driven by increased average
selling prices. Polaris North American
ORV retail sales decreased low-single
Scott Wine, Chairman and Chief
Executive Officer of Polaris
Industries Inc.
digits percent for the quarter with
Side-by-Side vehicles up low-single
digits percent and ATV vehicles down
high-single digits percent. Shipment
unit volume was down during the
quarter, in-line with retail sales
declines as the Company's retail flow
management process (RFM)
performed as designed. The North
American ORV industry was up high-
single digits percent compared to the
second quarter last year, partly driven
by new competitive product not in the
market a year ago.
For the full year 2019, the Company is
narrowing its earnings guidance range
by increasing the lower end to $6.10
per diluted share and maintaining the
upper end at $6.30 per diluted share,
including the impact of the China 301
list 3 tariff rate increasing from 10%
to 25% effective May 2019, and the
benefit of the Company's tariff
mitigation actions. The Company is
also narrowing its full year 2019 sales
guidance range and now expects sales
to grow in the range of 12% to 13%
compared to the prior year given only
six months remain to year-end.
NEWS
BRIEFS
A 1965 Aston Martin DB5 "Bond
Car" achieved a record-breaking
$6,385,000 during a single-
marque auction with Aston
Martin at RM Sotheby's
Monterey auction in August,
exceeding the previous record
by nearly $2 million.
New motorcycle registrations in the
UK were +2.33% January - July 2019
at 65,442 units. The largest single
sector there are 'Naked' style bikes,
accounting for nearly a third of sales
(22,742 units), with Adventure Sport
the second largest (12,820 units YTD
- the BMW R 1250 GS Adventure the
best seller). The 'Custom' sector was
worth just under 5,000 units for the
first seven months, with Harley's
Sport Glide the best seller.
Japanese made motorcycle
exports to USA for the first six
months of 2019 were -20.48
percent 29,762 units. Total PTW
exports (motorcycles, mopeds
and scooters) to USA were -
12.71 percent at 47,196 units.
Motorcycle exports to USA from
Japan were nearly 102,000 units
in 2009, having peaked at
around 217,000 in 2006. The
increasing number of units
being made by Japanese
manufacturers elsewhere in
Asia, the US and South/Central
America goes some way to
providing historical context for
the data.
H-D is facing a class action lawsuit for
an allegedly defective
anti-lock braking
system on the basis
that dealers and riders
were not warned about
an alleged defect in the ABS wiring
harness that could have resulted in
the "possibility of sudden,
unexpected ABS braking failure for
over 150,000 motorcycle owners
across the country." Plaintiffs in four
states have filed class action lawsuits
on behalf of the owners of Touring
model motorcycles produced from
2008 through 2010.
Global dividends for April to
June reached $513.8bn
(£423.6bn), up 1.1% from a year
earlier. The growth rate is
slowing though as the global
economy also slows. A strong
dollar is also making the growth
look sluggish. It is estimated
that companies worldwide will
pay out a total of $1.43 trillion
in dividends in 2019.
AMERICAN MOTORCYCLE DEALER - SEPTEMBER 2019
21
Polaris Reports Q2 Adjusted Sales
+18% at $1,779 million; Indian Gains
Market Share on Down Sales