Monthly Archives: October 2013

Arctic Cat F2Q 2014 Earnings Summary

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The new 50-inch Arctic Cat Wildcat is expected to ship in the second half of the fiscal year and help drive sales.

Arctic Cat sales increased a modest 4% for the quarter but side-by-side sales were strong. The following are some highlights from the earnings call with a focus on the side-by-side market.

  • Net sales for the second quarter increased 4% to 238.5 million from 229 million for the same quarter last year.
  • ATV sales, which includes ATVs and UTVs, increased 4% to 72.7 million driven by Wildcat and Prowler side-by-side sales.
  • Parts, garments and accessory sales decreased 1% to 30.4 million from 30.8 million.
  • Year-to-date net sales increased to 5.6% to 359.3 million from 340.3 million and net earnings increased 7% to 28.8 million from 27 million
  • Internationally Europe remains a difficult market but sales to Australia, Mexico and some of the Middle East and Latin American countries are up.
  • On a year-to-date basis ATV sales increased 4% to 149 million and parts, garments and accessory sales increased 2% to 52.3 million from 51.1 million.
  • For the quarter side-by-side retail sales increased by 23% driven by significant increases in the new Wildcat models, and the new Prowler HDX500 utility model.
  • There has been a net increase in the dealer network for Prowler and Wildcat product lines with the increase for the Wildcat line the largest.
  • Year to date R&D expenses increased 24% as management focuses on new product development, especially for side-by-sides.

Looking forward

  • Management expects sales to be in the range of 754 million to 768 million, an increase of approximately 12% to 14% versus fiscal ’13.
  • Arctic Cat will launch three new Wildcat side-by-sides in the next 6 months including the previously announced 50-inch Wildcat. Shipments for the other two new Wildcats are expected to begin in Q3 with dealer orders starting in November.
  • Off-road vehicles expected to be up 25% to 29% for the year.

Learn more:  Seekingalpha.com

Polaris Wins Military Contract to Supply UTVs

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Polaris was awarded a contract to supply vehicles like the MRZR4 to US Special Operations forces.

The United States Special Operations Command (USSOCOM) has awarded Polaris Industries a contract to provide MRZR Lightweight Tactical All Terrain Vehicles. The MRZR2 and MRZR4 are highly-mobile, CV-22 transportable, multi-configurable off-road platforms, and will be supplied with accessories, spare parts, mechanical and operator training. The contract spans five years. The company recently was awarded a military contract for ATVs as well. Polaris provides vehicles to the US military and allied militaries. Learn more:  Businesswire.com

Comment:  Growing the military business has been a strategic initiative of Polaris management and they have been able to execute on their plan. In their recent quarterly earnings report they noted that year over year sales for the military segment increased significantly. They have been helped in recent years by the strong expansion of the US Special Operations forces. They are also taking some of the technology developed for the military, like non-pneumatic tires, and bringing them into the commercial and consumer markets.

Polaris Q3 2013 Earning Results Summary

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Polaris Ranger and RZR lines helped drive 3Q ORV sales

Polaris Industries once again had a strong quarter as sales surpassed $1 billion for the first time in the company’s history. The following are some highlights from the earnings call with a focus on the side-by-side market and small vehicle business.

  • Quarterly sales increased 25% to $1.1 billion
  • Third quarter net income from continuing operations rose 24% to $116.9 million
  • Off-Road Vehicles (ORV) which includes side-by-sides and ATVs posted a 23% gain and PG&A jumped 37%
  • Year to date ORV sales increased 12%
  • Polaris North American side-by-side retail sales improved low teens percent, and the side-by-side industry was estimated to have grown in the low double digits.
  • Key drivers included higher demand for the Ranger line, RZR XP 1000 and the new XP 4.
  •  The Polaris ORV Commercial business was up double digits in the third quarter, led by the new Brutus product rollout and sales to Bobcat. However sales were slower than expected and more marketing resources are being put into the effort as dealers have to adapt to the business to business sales process.
  • Small vehicle revenue increased over $21 million and 188% for the third quarter, due primarily to the Aixam purchase. Year-to-date, revenue was up 136%.
  • For the GEM line  retail sales are up over 50% through the third quarter and year to date as the dealer network and B2B sales efforts gained traction. The company just introduced the new eM1400 electric utility vehicle as well.
  • Aixam had a good quarter expanding share of the European quadricycle market share lead in the third quarter and year-to-date as retail sales remained roughly flat while the overall market declined upper single digits.
  • Goupil revenue grew nicely year-over-year, and year-to-date, customer orders are up double digits.  
  • In Europe the ORV industry remains relatively weak, with third quarter and year-to-date sales down about 12%. Polaris is building on its market share leadership position, with third quarter retail sales about flat and year-to-date retail sales down low single digits.
Looking forward:
  • Management increased the full year sales guidance to up 15% to 16% over 2012.
  • Sales of Off-Road Vehicles are expected to increase in the 11% to 12% range, up from prior guidance, with retail sales of side-by-side vehicles and ATVs continuing to outpace the overall market in both North America and internationally.
  • Competition has increased in the ORV market.
  • Management expects ORV market share to increase in 2013 but at a slower rate than recent years.
  •  For small vehicles, sales are expected to increase over 150% for the full year 2013.
  •  Monterrey, Mexico plant will deliver well over half of Polaris’s side-by-side volume in 2014.
  • In India the Eicher partnership is moving ahead with a plant under construction in Jaipur, India for a late 2014 launch of a new vehicle solution for that market.
  • More resources will be put into the Brutus sales efforts as the longer purchase cycle in the business to business market has tempered sales expectations. Efforts will likely focus on “…some of our most capable and committed subset of our existing Polaris ORV channel.”

Learn more: Seekingalpha.com (earnings call transcript)

GEM Introduces New Electric UTV: GEM eM1400

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The new GEM eM1400 marks a departure from the traditional GEM models.

GEM has added a totally new member to their product lineup, the GEM eM1400. The all electric utility vehicle is a more heavy duty utility vehicle than the rest of the product line and, significantly, is not an LSV. It has an MSRP of $9,999. I spoke with GEM as well as GEM dealer about the vehicle to get some more information.

In part, the vehicle is a response to demand for an electric utility vehicle that does not have to be used on public roads and therefore does not need to be LSV compliant. This may be up to half of the GEMs sold today. The main differentiating features of the eM1400 are the 1,400 lb payload, 1,250 lb towing capacity, 8.5 inch ground clearance and the fully independent suspension. GEM claims the ride will be significantly better than other UTVs in its class. While not using the same parts as suspensions from the Polaris Ranger line of UTVs it does borrow the “same architecture and design philosophy”.

The main competitors for this vehicle currently in the market are the e-Gator and the electric Toro Workman UTV, the Carryall models from Club Car, electric UTVs from E-Z-GO and Cushman as well as gas powered alternatives. This entry into the market is definitely pushing GEM into more direct competition with these other brands.

While GEM has a strong presence on college campuses for transport and general maintenance, according to the dealer I spoke with, the demand for such a heavy payload in this market segment is limited. Combined with it not being LSV compliant, sales to this segment will probably be lower than other GEM models. On the other hand, I believe it might have more appeal to grounds crews on college campuses where a more rugged and heavy duty UTV is needed. GEM management sees the vehicle as having a much wider appeal than just the university market, basically anywhere a rugged, electric UTV is needed from landscaping to plants to golf courses. The dealer noted that use in industrial settings is most likely where the demand for the payload capacity will be. Users who mount special equipment like compressors or welders will be prospects.

Polaris will start building the GEM eM1400 in early November and they should be in the market by the end of November. The company is already taking orders from dealers. According to management, there may be some GEM dealers, like the legacy Chrysler dealers and those focused on the LSV market that may choose not to carry the new model. At the same time there is also the possibility that some Polaris dealers may have interest in carrying this GEM model. How that is handled by the company will depend on dealer interest.

The dealer I spoke with also remarked that if you add accessories including a cab, which is needed in some areas, the price could easily reach $13,000 which is pretty pricey. He also noted that GEM is known for their LSV compliance, 72 volt system, maintenance-free batteries, aluminum frame and unique styling and the eM1400 has none of those features. It might thus detract from the GEM image or falsely attract prospects who assume it has the normal GEM features. I would say he has point here, the eM1400 is clearly a departure from the traditional GEM product line. On the other hand, this vehicle could move the GEM brand more strongly into additional market segments. If done well the new vehicle could help reposition the brand more broadly as an electric small, task-oriented vehicle brand as opposed to the more limited positioning as an electric LSV brand. This would be relevant for markets outside the US as well.

Lastly, the dealer noted that some of the new GEM dealers come from a powersports background and are not as experienced in selling to commercial or institutional purchasers which usually require more direct outreach from the dealer as opposed to waiting for customers to walk through the door. I think this point is valid and it remains to be seen if newer GEM dealers can adapt their sales approach. The more successful dealers I know in this market are the ones that actively go out and demo vehicles for potential customers. This means having the time, people and equipment to make appointments, haul vehicles around the sales territory and demo the vehicles on site for potential customers.

The press release from GEM follows:

The long-awaited GEM® innovation is finally here! All electric-powered and purpose-built to last, the GEM eM1400 is the ultimate work vehicle. It delivers more power, more payload, and an exceptional ride backed by Polaris’ 60 years of performance and innovation.

Perfect for applications in industrial, commercial, government and education markets, the GEM eM1400 balances performance and versatility to tackle the work your customers need. Classified as a LEV (Low Emission Vehicle), this is the perfect vehicle for hauling cargo across your property or jobsite.

Key features of the GEM eM1400 include:

  • 1400 lb payload
  • 7 HP AC motor
  • 1,250 lb towing capacity
  • Range of up to 45 miles, top speed of 19 mph
  • Rugged, ergonomic design
  • Independent front and rear suspension
  • Lock & Ride®, Lock & Work™ configurability options

Learn more:  Polaris.com

New Concept Drawings for Coachella Valley Multi-Use Parkway

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Concept drawing for multi-use parkway between Palms Springs and Coachella in California

The Coachella Valley Association of Governments presented new concept drawings for a 52 mile multi-use parkway for pedestrians, cyclists and LSVs/NEVs. Running along the Whitewater River wash between Palm Springs to Coachella, the drawings depict a parkway with “interactive kiosks where people would be able to see the trail’s real-time impacts on air quality and greenhouse gases and night-time laser light shows that would be motion-activated as users walked or cycled by.” Shade structures and color accents are key parts of the design. The concept also includes different configurations for the parkway as it conforms to the changing landscape along the 52 mile route. There has been mixed reaction to the parkway and some gated communities and country clubs would rather not have the project run through their properties. The exact route is still being worked out with potential alternatives for bypassing these properties being considered. In general, the cycling community is behind the project, if not enthusiastically. CVAG has pitched the project with an $80 million price tag — $70 million for construction and $10 million for operation and maintenance. Federal and state transportation and air quality funds will help fund the project.  Learn more: Mydesert.com

 

Curtis Industries Introduces New Cabs For Gator UTVs

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Curtis Industries has introduced new cab systems for the John Deere Gator XUV and HPX UTVs. The all steel cab enclosures fit 2013 and prior year models. Key features of the cab systems include:

  • Ventilation provided by dual sliding windows in both doors and the rear panel. The glass is double-strength reinforced laminated glass and meets industry safety regulations. The laminated windshield offers a locking, venting position and includes a heavy-duty 12V wiper.
  • Mounted, tuck-away heater
  • Optional LED strobe work and safety lights
  • Lower acrylic panels for visibility
  • Steel roof

The company will be introducing cabs for four passenger XUV Gators in the coming weeks.

Learn more:  Fireengineering.com

What’s Cooking On The STOV

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Highlighting some of the many applications for small, task-oriented vehicles

Spokane police add a Kawasaki Mule to their fleet

Downtown Police Patrol – The Spokane, WA police recently purchased a Kawasaki Mule to help their effort to reduce crime in the downtown area. The vehicle will be used along downtown streets as well as the Centennial Trail and around Spokane’s Riverpoint Campus. A federal grant helped pay for the vehicle which will be used to speed up foot patrols rather than a replacement for car patrols. The police department likes that the open air vehicle makes officers more accessible to the public and the flatbed in the back adds versatility for other tasks. The vehicle has a top speed of 25 mph. Learn more:  Spokesman.com

Comment:  You often see law enforcement  using UTVs at the beach or exclusively on trails rather than downtown areas. LSVs tend to be more popular for downtown patrols or for parking ticket duty. The UTV offers a little more versatility for a mix of on and off-road use, although off-road specific tires can wear out quickly with a lot of street driving.

Indian Start-Up Gets Funds For Low-Cost Rural UTV

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Evomo Research & Advancement Pvt Ltd of India has received funds from a local business incubator for development of a low-cost rural utility vehicle. Started in 2010, Evomo, will use the unspecified amount of funds to get to a stage where it can take preorders for actual sales. The management, in part, sees the vehicle as a safety issue since it can replace many of the dangerous makeshift vehicles that are now used in many rural areas.

The Evomo UTV is an off-road vehicle for both passengers and goods in rural areas. Management claims the vehicle is legal, less polluting, handles rough terrain, can be transformed from people carrier to goods carrier and performs some of the agricultural functions like pumping water and carrying cargo. Powered by a diesel engine it has a top speed of 50-60 km/hour.

Learn more:  VCCircle.com

Kubota Introduces New X-Series UTVs

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The new RTV-X900 from Kubota

Kubota used their dealer meeting to introduce the new X-series line of UTVs. The model lineup includes the RTV-X900, the RTV-X1120D, and the RTV-X1100C. “The new Kubota X-Series is the perfect combination of beauty and brawn,” said Dan Muramoto, Kubota RTV product manager. “We have raised the bar on styling, ergonomics, comfort and storage without giving up the durability, ruggedness and reliability that Kubota utility vehicles are known for. We’ve taken a huge leap with feature enhancements for this line, and the powertrain componentry, fit and finish, and quality of materials are arguably best-in-class.”

Key features of the vehicles include:

RTV-X900

  • 21.6 HP diesel engine
  • Hydraulic power steering
  • 2 in. hitch receivers at the front and back
  • Steel cargo dump box with 1,102 lb capacity

The new RTV-X1120D from Kubota, the deluxe model of their X series

RTV-X1120D (Deluxe model in the line)

  • 24.8 HP diesel engine
  • 29 mph top speed
  • Blue tinted halogen headlights
  • Polished alloy wheels
  • Hydrostatic steering with tilt steering

The new RTV-X1100C from Kubota with factory installed cab

RTV-X1100C

  • Factory installed cab with heating and AC
  • Roll down windows and nearly airtight cab
  • Pre-wired for antenna and two speakers

All models feature Kubota’s diesel engines and Variable Hydraulic Transmission. The Kubota RTV-X900 and X1100C replace the RTV900XT and the RTV1100, respectively, and the RTV X1120D is an incremental new model. Kubota will continue to offer the RTV400, RTV500 and RTV1140CPX in 2014.

Comment:  With this new line-up of vehicles it looks like Kubota is trying to improve the look and passenger comforts of the vehicle. Unlike the recreational end of the market where increasing the horsepower is important, the work oriented X900 and X1100C kept the same engine size as the vehicles they are replacing but added styling and comfort features.