Indian And Victory Motorcycle Sales Up For Polaris

Polaris Industries, parent company of Indian and Victory Motorcycles as well as the three-wheeled slingshot have started the New Year as they wrapped up the old one, continuing to look to the riding community for its successes.

The American manufacturer that produces Off-Road Vehicles (ORV) and snowmobiles as well as those brands familiar to the motorcycle community released its financial results for the first three months of 2016 this morning. Many headlines will read the multifaceted manufacturer beat expectations leaving Wall Street happy. The story behind the headlines is that of a company seeing success in its motorcycle related products, helping with a tough time in the world of ORV’s and snowmobiles.

Polaris had already said they would be facing these challenges which is why they’ve enjoyed a financial thumbs up in the face of some challenging numbers.

Polaris Industries Inc. reported a first quarter net income of $46.9 million for the quarter ended March 31, 2016 compared to $88.6 million reported in the first quarter of 2015. Sales for the first quarter 2016 totaled $983.0 million, down five percent compared to last year’s first quarter sales of $1,033.3 million.

 “Our first quarter results were in line with our projections, in spite of increased expenses for warranty and product liability,” commented Scott Wine, Polaris’ Chairman and Chief Executive Officer. “Our Customer Excellence initiatives and new products drove a six percent increase in North American retail, and in conjunction with shipment reductions, better demand forecasting, and process control improvements, enabled us to continue reducing dealer inventory levels year-over-year.”

The ten thousand foot view sees the company’s motorcycle sales increasing 18% during the quarter with ORV/Snowmobiles and Global Adjacent Markets sales down, all of which are in-line with expectations.

Add to these mixed sales, the first quarter results included additional expenses totaling approximately $30 million related to certain product liability settlements, ORV related warranty accruals, severance costs and acquisition related costs.

The acquisition costs were incurred in March 2016 when Polaris bought Taylor-Dunn, a manufacturer of commercial vehicles such as those seen ferrying passengers through airports as well the tractors which tow large aircraft.


2016 Victory Octane - Source Victory Motorcycles

The Good News

It appears the world likes the motorcycles Polaris is producing. Overall, motorcycle sales were up 18% with Polaris giving the nod to Indian for its strong retail sales.

North American consumer retail demand for the Polaris motorcycle segment, including Victory, Indian Motorcycle and Slingshot, was up low-teens percent during the 2016 first quarter. This was in the face of overall motorcycle industry retail sales which was about flat in the 2016 first quarter for 900cc and above.

It appears the company has put the painting plant misstep behind them with product availability for Victory, Indian Motorcycle and Slingshot improved considerably in the 2016 first quarter and dealer inventories are essentially at targeted stocking levels at quarter-end.

We could call it 'Postcards to Polaris', the company is enjoying some international motorcycle love, just how much requires some peeling back of overall numbers.

Overall international sales were up 12 percent in the 2016 first quarter with Latin America taking the top slot for most improved, up 29 percent. Europe, Middle East and Africa (“EMEA”) reported sales increased six percent in the 2016 first quarter and Asia Pacific reported sales were down seven percent.

With ORV/Snowmobiles segment sales down one percent it left Motorcycles segment sales to ride in a deliver the numbers which were up 42 percent.

Both the ORV and snowmobile sales are facing a tough time for different reasons.

Even though Polaris in the top manufacturer in the ORV world, its sales for this segment fell 12 percent reflecting ongoing softness in retail sales in North American oil markets. Warmer winters have been the culprit for slower snowmobile sales, although on a high note, the Company gained market share the 2016 first quarter and for a third consecutive year for the season ending March 31, 2016.


2016 Indian Springfield - Source Indian Motorcycles

What’s Next?

As avid Clutch and Chrome readers may remember, during the 2016 first quarter, Polaris released two new additions to its Victory and Indian motorcycle line-up with the introduction of the Octane, Victory motorcycles’ first mid-sized cruiser and the new Indian Springfield, named after the birthplace of Indian Motorcycle. Slingshot also broadened its color options with its 2016 model introduction including the new Limited Edition White Pearl SL.

“I still believe 2016 is likely to be another volatile year in powersports, but we are seeing pockets of strength,” Wine noted, “The North American ORV industry was up in the first quarter, with March experiencing the strongest improvement.”

Overall, Polaris feels it may only see its sales increase by two or three percent over 2015 and this isn’t necessarily a reflection of its motorcycle success. Motorcycle sales make up less than twenty percent of the company’s overall sales.

“We remain focused on an all-out assault on costs and rededicating the business to drive growth, not only for this year but as part of a renewed commitment to achieving our 2020 objectives,” Scott Wine, Polaris’ Chairman and Chief Executive Officer said, “The entire Polaris team is united, and determined, to grow sales and expand margins.”

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