American Motorcycle Dealer AMD 170 September 2013 | Page 11

Polaris reports continued record sales
ICTORY Motorcycles’ and Indian Motorcycles’ parent company Polaris has announced second quarter figures that show a 12 percent increase on the same period last year at a record $844.8 million. Scott Wine, Polaris’ Chairman and CEO, said: “We are pleased with the strength of our brands and the performance of our team, as they overcame unusually wet weather conditions across North America and sluggish international consumer demand to once again deliver record results. Retail sales to consumers in North America rose 11 percent in the second quarter, accelerating from softer first quarter results and sequentially reducing dealer inventory ahead of perhaps the most eagerly anticipated new product launch in the company’s history. In addition, we expanded gross margin by 120 basis points, driven in large part by increased selling prices and continued product cost reduction efforts.” ine continued: “The second half of 2013 will be a momentous time for Polaris. In the coming weeks we will introduce some of the most exciting products in our history, which we expect will accelerate retail growth for the remainder of the year and beyond. The much anticipated relaunch of Indian Motorcycles has finally arrived, just a few short years after we purchased the brand in 2011. The motorcycles are gorgeous, the distribution channel is developing nicely and on August 3rd at the motorcycle rally in Sturgis, South Dakota, we will officially bring choice, in the form of the oldest American motorcycle company, back to the motorcycle riding community. While we are extremely enthusiastic about our future in motorcycles. Given continued share gains, and the actual performance of the company in the second quarter, we are again confident in raising our earnings expectations for the full year 2013.” For the full year 2013, the company is increasing its earnings guidance and now expects earnings to be in the range of $5.20 to $5.30 per diluted share, an increase of 18 to 20 percent over full year 2012 earnings of $4.40 per diluted share. Full year 2013 sales are expected to grow in the range of 13 percent to 15 percent from 2012. ales for the Motorcycles division, which includes both Victory and Indian motorcycle sales, decreased six percent to $49.9 million in the 2013 second quarter compared to same period last year. The decline in the 2013 second quarter sales is due to the

V

Second Quarter Performance Summary (in thousands except per share data)
Three Months ended June 30 2013 Motorcycles Sales Total Sales Gross Profit Operating Expenses Operating Income Net Income $49,872 $844,800 $252,338 $138,286 $125,554 $80,004 2012 $53,122 $755,446 $216,749 $114,530 $110,434 $69,823 Change -6% +12% +16% +21% +14% +15% Six Months ended June 30 2013 $101,669 $1,590,709 $468,986 $263,039 $227,523 $155,468 2012 $108,011 $1,429,196 $411,712 $225,129 $201,981 $129,901 Change -6% +11% +14% +17% +13% +20%

W

S

timing of shipments under the current order taking process called retail flow management (RFM) which is closely tied to retail sales, compared to the second quarter last year wherein shipments were made based on annual dealer orders and timing of production. North American industry heavyweight cruiser and touring motorcycle retail sales increased low single digits percent during the 2013 second quarter as compared to the prior year’s second quarter. Over the same period, Victory North American consumer unit retail sales also increased in the low single digits percent range. North American Victory dealer inventory increased over 2012 levels due to increased segment stocking as part the RFM order taking process and an increase in the dealer count, as expected. nternational sales totaled $135.5 million for the 2013 second quarter, which represents a 22 percent increase over the same period in 2012. The increase in the second quarter sales included the recent acquisition of Aixam Mega, which accounted for essentially all of the increase. While PG&A sales were strong, wholegood ORV and motorcycle sales remained weak outside North America during the 2013 second quarter, due to continued sluggish economic and industry conditions primarily in Europe and Australia. However, the company continued to gain market share during the 2013 second quarter in both off road vehicles and motorcycles. Gross profit was 29.9 percent of sales for the second quarter of 2013, an increase of 120 basis points from the 2012 second quarter. Gross profit dollars increased 16 percent to $252.3 million for the second quarter of 2013, compared to $216.7 million for the second quarter of 2012. The increase in gross profit dollars and percentage of sales was primarily due to continued

product cost reduction efforts, higher selling prices and higher PG&A sales, offset somewhat by higher promotional costs and increased warranty costs. perating expenses for the second quarter 2013 increased 21 percent to $138.3 million or 16.4 percent of sales compared to $114.5 million or 15.2 percent of sales for the second quarter of 2012. Operating expenses in absolute dollars and as a

O

percentage of sales for the secon ]X\?\???L?[??X\?Y?[X\?[HYH?Y?\??[\?[?X\??][??????\?X[H?[]Y?H\??Z[??[?X[?[???X?\??K[][??[??X\?Y?[?\?[[?YZ[?\??]]?H^[??\??X?[??YHY][?[^[??\??[]Y?H?X?[?Z^[HX?]Z\?][?[???[?YY[???\??X?\?H[??\?Y[???Z[??XYH??\????[?]X]]?\???˜?\?\?[?\??Y\???B??B?????SQ?[\[??\???B??SQT?P?S?S???P?HPST?H?TSP?T??L??LB??