Polaris CEO Scott Wine Talks About Market, Economy & Expectations

| October 19, 2009 | 0 Comments

Polaris IndustriesWith the introduction of the UTV market also came the turn in the economy.  As we watched the exponential growth of this new market of vehicles, we also started to watch people struggle with their economic decisions.  Almost two years later the UTV industry is settling in to stay and the economy has been affected by people recognizing that getting out and enjoying off road vehicles is a necessary habit for Americans.

On Thursday Polaris CEO Scott Wine talked with CNBC’s Melissa Francis about their large sales decline, and how Polaris beats earnings expectations in the third quarter.  He also talks about the new model introductions that takes them to 25 products in 2010.  Wine is all about getting ahead in a down market!

Read More Detail Here….
By LIZ FEDOR, Star Tribune

Shares of Polaris stock rose nearly 11 percent Thursday after the company beat Wall Street’s third-quarter earnings expectations and raised its estimate for a fourth-quarter profit.

The maker of all-terrain vehicles and snowmobiles continued to be pummeled by the recession in the third quarter, with sales plummeting 25 percent to $436 million.

But the company managed to produce net income of $31.2 million, down 17 percent from a year earlier. The quarterly earnings per share of 94 cents beat the consensus estimate of analysts by 9 cents.

“We cut production and shipments more than the retail sales decline, which enabled us to bring down dealer inventory and also gain [market] share,” Polaris CEO Scott Wine said in a Thursday conference call.

The company was lauded by analysts on the conference call and in research reports Thursday.

“The third quarter was a very strong one for Polaris amidst a difficult consumer environment,” analyst James Hardiman wrote in a research report for FTN Equity Capital Markets.

Wine prepared investors to expect 2010 to be another tough sales year. “We do not expect a V-shaped recovery and are not planning on any tailwinds from the U.S. or our key international markets,” Wine said. Instead of a robust recovery, Wine said he anticipates a “poorly-written U,” meaning the improvement in economic activity will be gradual over an extended period. He said high unemployment rates and the need for consumers to repair their personal balance sheets will depress sales.

The Medina-based company didn’t provide earnings or sales guidance for 2010, but it boosted its earnings estimate for the full year in 2009. The company said it now expects 2009 earnings to be in the range of $2.92 to $2.98 per share, up from its July estimate of $2.70 to $2.90. Previously it estimated that 2009 sales would be down 20 to 25 percent, but on Thursday it narrowed the estimated decline to a 20 to 22 percent range.

For the fourth quarter, Polaris anticipates sales will be down 12 to 17 percent. Sales were hard hit in the fourth quarter of last year following the meltdown of the financial system and deepening global recession.

Analysts and investors gave Polaris high marks on Thursday for how the company’s executives have managed through the recession. The company’s stock closed Thursday at $48.71, up $4.71.

Wedbush Equity Research boosted its 2009 earnings projection from $2.76 to $2.94, and its 2010 estimate from $3.07 to $3.17, in part because it said the 2010 models should produce higher profit margins than earlier product lines. It also said that Polaris is gaining market share, and stands to benefit from the introduction of the Ranger 400 side-by-side off-road vehicle, priced at $7,999, which will likely attract more cost-conscious consumers.

In the third quarter, more than half of the company’s revenue came from the sale of off-road vehicles — all-terrain models and side-by-side vehicles. Sales in that category fell 30 percent to $261 million.

Parts, garments and accessories dropped 11 percent to $84 million, while snowmobile sales declined 13 percent to $82 million.

The on-road vehicle segment, consisting mainly of Victory motorcycles, saw a dramatic 56 percent sales slide to $9 million.

Polaris President Bennett Morgan said the company has continued to pare inventory, and dealer inventories of all-terrain vehicles are now down 30 percent in North America compared with a year ago.

In North America, sales of all Polaris products declined by 23 percent in the first quarter, 22 percent in the second and 17 percent in the third.

During the third quarter, the Canadian market was the strongest for Polaris. For all products, sales in the United States slid 28 percent, revenue from Canada declined by 14 percent and the drop in all other countries was 24 percent.

Wine said, “We do not ever plan to get comfortable with large sales declines, but I do like the way we’ve managed through this downturn.”

Polaris CNBC


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