U . S Indian Retail Demand Up
Polaris has posted North American retail sales of + 6 % for the quarter , with ORV up midsingle digit % for both side-by-side and ATV vehicles and gaining market share for ORV vehicles and Indian motorcycles . The company has increased its full year 2018 sales guidance to be + 11 % to + 12 % taking into account improved volume expectations and the acquisition of Boat Holdings , LLC ( Boat Holdings ) – representing Polaris ’ first foray into the marine market ; the company has also raised the lower end of its earnings per share range and now expects adjusted net income to be in the range of $ 6.48 to $ 6.58 per diluted share , which includes the absorption of an estimated additional $ 40 million of tariff and related commodity cost increases anticipated in 2018 . Motorcycle segment sales , including PG & A , totaled $ 171 million , a decrease of -13 percent compared to $ 198 million reported in the second quarter of 2017 due to a weak motorcycle industry and timing of shipments for Indian motorcycles year-over-year . Slingshot sales were also down due to the weak motorcycle industry . Gross segment profit for the second quarter of 2018 was $ 25 million compared to $ 21 million in the second quarter of 2017 . Adjusted for the Victory winddown costs recorded in both the 2018 and 2017 second quarters , and restructuring and realignment costs , motorcycle gross profit was $ 25 million in the 2018 second quarter compared to $ 30 million for the 2017 second quarter . North American consumer retail demand for the Polaris motorcycle segment , including Indian Motorcycle and Slingshot , increased low-single digit percent during the 2018 second quarter . Indian Motorcycle retail sales increased mid-single digit percent . Slingshot ' s retail sales
Scott Wine , Chairman and Chief Executive Officer of Polaris : “ Between organic growth and considered acquisitions , Polaris ’ underlying performance has significantly improved , but much of our success is being masked by substantial cost escalation driven by tariffs and commodities ”
were down mid-single digit percent during the quarter . Motorcycle industry retail sales , 900 cc and above , were down mid-single digit percent in the 2018 second quarter . Indian Motorcycle gained market share for the 2018 second quarter on a year-over-year basis in spite of an overall weak north American motorcycle market in the second quarter . Motorcycle dealer inventory was down low-single digit percent in the 2018 second quarter compared to the same period last year due to moderated shipments in an overall weak motorcycle market . Scott Wine , Chairman and Chief Executive Officer of Polaris Industries Inc ., is quoted as saying : " I am very pleased with the Polaris team and the strong execution they delivered across the business during the 2nd Quarter . With solid retail growth and market share gains in both our Off-Road Vehicle business and Indian Motorcycle , we are clearly reaping the benefits of our safety and quality investments , new product innovations and improved delivery performance . “ Consumer sentiment and dealer traffic improved throughout the Quarter , building momentum which will help offset the rising risk of tariffs in
‘ Indian Motorcycle retail sales increased mid-single digit percent ’
CONSOLIDATED STATEMENTS OF INCOME ( LOSS ) ( in thousands US $) |
Three months ended June 30 |
Six months ended June 30 |
|
2018 |
2017 |
2018 |
2017 |
Sales |
1,502,532 |
1,364,920 |
2,800,005 |
2,518,702 |
Cost of sales |
1,117,356 |
1,014,534 |
2,091,348 |
1,925,825 |
Gross profit |
385,176 |
350,386 |
708,657 |
592,877 |
Operating expenses : Selling and marketing |
122,859 |
118,531 |
240,566 |
232,844 |
Research and development |
68,330 |
60,753 |
133,560 |
112,758 |
General and administrative |
92,874 |
91,063 |
171,567 |
166,577 |
Total operating expenses |
284,063 |
270,347 |
545,693 |
512,179 |
Income from financial services |
21,344 |
19,143 |
42,769 |
39,573 |
Operating income |
122,457 |
99,182 |
205,733 |
120,271 |
Net income |
92,540 |
62,041 |
148,254 |
59,130 |
Diluted Net income per share : $ 1.43 $ 0.97 $ 2.28 $ 0.92 ‘ tariffs masking success ’
the 2nd half . During the Quarter we were excited to announce another expansion of the Polaris powersports portfolio with the acquisition of Boat Holdings , the largest manufacturer of pontoon boats in the U . S . “ Between organic growth and considered acquisitions , Polaris ’ underlying performance has significantly improved , but much of our success is being masked by substantial cost escalation driven by tariffs and commodities .” Off-Road Vehicle (“ ORV ”) and Snowmobile segment sales , including PG & A , totaled $ 991 million for the second quarter of 2018 , up + 17 percent . ORV wholegood sales for the second quarter of 2018 increased + 18 percent primarily driven by strong RANGER , RZR and ATV shipments . Global Adjacent Markets segment sales , including PG & A , increased + 17 percent to $ 113 million in the 2018 second quarter compared to $ 97 million in the 2017 second quarter . Sales of Goupil and the Commercial , Government and Defense businesses drove most of the increase . Reported gross profit increased + 32 percent to $ 28 million in the second quarter of 2018 , compared to $ 21 million in the second quarter of 2017 . Aftermarket segment sales increased one percent to $ 227 million in the 2018 second quarter compared to $ 224 million in the 2017 second quarter . TAP sales in the second quarter of 2018 were $ 210 million , which was up slightly compared to the second quarter of 2017 . Growth at TAP ' s retail stores and online platforms were largely offset by lower accessory sales for the new Jeep Wrangler , which was available for sale later than anticipated . Gross profit decreased to $ 58 million in the second quarter of 2018 , compared to $ 60 million in the second quarter of 2017 . International sales to customers outside of North America , including PG & A , totaled $ 204 million for the second quarter of 2018 , up + 7 percent from the same period in 2017 . Foreign exchange movements represented four percent of the sales increase for the quarter . The remaining increase was driven by strong sales in the company ' s EMEA business for ORV and motorcycles . During the second quarter of 2018 , the company repurchased and retired 1,429,000 shares of its common stock for $ 177 million . Year-to-date through June 30 , 2018 , the company has repurchased and retired 1,562,000 shares of its common stock for $ 192 million . As of June 30 , 2018 , the company has authorization from its Board of Directors to repurchase up to an additional 4.9 million shares of Polaris common stock .
22 AMERICAN MOTORCYCLE DEALER - AUGUST 2018 www . AMDchampionship . com