Category Archives: GEM

Polaris Reports Strong Quarterly Earnings For Q2 2015

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Beauty shot of the new Sportsman ACE from Polaris.

The Sportsman ACE from helped drive Polaris ORV sales in the 2nd quarter.

Last week Polaris reported record 2nd quarter sales of $1.124 billion. While the company missed Wall Street expectations, they continued to experience growth across product categories including ORVs and small vehicles. The main problems for the quarter stemmed from very high demand for their motorcycles and issues with a new paint system exacerbated by the greater than expected demand. The following is a summary of  key points related to ORVs and small vehicles.

  • The new Huntsville plant is on budget and on time for a Q2 2016 start
  • ORV revenue (UTVs and ATVs) increased 2% in the quarter driven by strong RZR sales globally but offset by reduced shipments to dealers to lower inventory levels
  • Year to date ORV revenue is up 6%
  • Management reports gaining North American market share in side-by-sides and ATVs
  • Side-by-side retail sales increased high single digits which slightly outpaced the industry
  • Full-size Rangers and the ACE showed strength while there was some weakness in value and entry offerings
  • Sales promotion pressures were strong in the 2nd quarter
  • Management reports continued strong competition in the ORV market with ongoing product innovations from competing brands.
  • Global Adjacent markets decreased 3% in the 2nd quarter but are up 2% year-to-date and up high single digits in constant currency measurement
  • North American work and transportation revenue grew high teens percent driven by expansion and success in direct national account business and the Ariens partnership but there was weakness in the BRUTUS Channel caused by distribution, transition and erosion.
  • GEM revenue increased driven by double-digit retail growth
  • European work and transportation decreased high teens percent due primarily to currency weakness and some softness in the European quadricycle industry, which  is flat year-to-date.
  • Second quarter defense sales increased low single digits primarily due to timing of orders but the outlook remains strong with increasing DAGOR and RZR and international demand.
  • In international sales Latin America and Asia Pacific sales were strong while EMEA revenue suffered from currency issues and a weak Russian market.
  • Polaris launched their multi-purpose vehicle the Multix in India. The partnership with Eicher will start with 30 dealers and build to 200 by 2020.
  • Revenue guidance for the year is narrowed but essentially unchanged.

Learn more:  Seekingalpha.com (earnings call transcript)

Comment:  While the the UTV market may not be growing as fast as previous years, it is still showing signs of strong growth and is outpacing the economy in general. This is despite weaknesses in oil and agriculture driven markets. Competition continues to remain at a high level as exhibited by elevated promotion levels, numerous product introductions and continued product innovation.

Polaris Ranger To Be Used In DARPA Robotics Challenge

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Polaris is providing a modified Ranger XP 900 EPS for the DARPA Robotics Challenge

Polaris is providing a modified Ranger XP 900 EPS for the DARPA Robotics Challenge

A Limited Edition DARPA Polaris Ranger XP 900 EPS will be used in part of the DARPA Robotics Challenge held June 5-6, at the Fairplex, in Pomona, CA.

This DARPA Robotics Challenge was created to spur development of robotic technology that can help humans to better respond to future disasters. The Challenge Finals will have robots perform a number of tasks in a continuous course, simulating what might be encountered in a real disaster situation. DARPA will use the RANGER XP 900 EPS in one of the most difficult tasks to help demonstrate a robot’s ability to operate and to egress from a vehicle, since they are among the tools commonly on hand in disaster zones.

The Ranger XP 900 EPS was modified for use in the event including:

  • A remote SafeStop electronic throttle kill
  • Brake actuation technology
  • A 1,000 lb. capacity bed for the robot’s power supply
  • Bench seat and tilt steering to create more room for a robotic driver
  • Terrainarmor airless tires

For Polaris the event is an opportunity to further develop a vehicle platform with which robotic companies can integrate their own products. Polaris is also providing GEM vehicles for robot, people and supply transport at the event. Learn more:  Polaris.com

Comment:  The Challenge is a good opportunity for Polaris to work on product development for autonomous vehicles for both disaster relief and military applications as well as creating a vehicle platform for robotics companies. Building vehicles for speciality applications with specific features and options is also an effective way to produce higher margins in an increasingly competitive UTV market.

NEVs: The Future of Transportation?

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An essay in the May issue of Harvard Business Review makes the argument that vehicles like the NEV will be the future of transportation. The premise is that in the future car ownership will decline significantly as ride-sharing services become a more dominant mode of transportation. Given that most driving trips are local, NEVs are positioned well for this changing market, particularly in urban areas. Industry analysts view car-sharing services and autonomous vehicles as the future. An analyst from Morgan Stanley used the following graphic to illustrate the expected shift in car ownership and use.

What one analyst sees as the future for cars.

What one analyst sees as the future for cars.

There are some statistics that indicate the transformation is already under way. “… the average person uses his car for only one hour a day, according to a still-widely cited 1995 statistic from the U.S. Department of Transportation. And driving by U.S. household fell nearly 10 percent between 2004 and 2014, marking the first major shift in car ownership since World War II.”  However, it may be a while before a wholesale shift happens, if it ever  does. Learn more:  Huffingtonpost.com

Comment:  While NEVs are popular in certain areas, like vacation communities and gated communities, they have not quite gained traction as predicted. In fact, SVR’s research shows that their use has largely switched from predominately personal transportation to commercial use, such as on college campuses and resorts. One reason is that more municipalities are allowing golf cars or modified golf cars to be used on public roads. The price differential between these and NEVs make the NEV the less frequent choice in these areas. Where ordinances are more restrictive, NEVs have proven to be a popular choice. The key to expanding the market is allowing the vehicles to travel at a higher speed than the currently regulated 25 mph. A NEV with a top speed in the range of 35 mph to 45 mph, often referred to as a medium speed vehicle (MSV), would open up the market considerably but this would require significant and costly changes in NEV safety equipment and/or design. NHTSA has been adamant about not creating an MSV classification as currently envisioned, and they are not enthusiastic about the mixing of NEVs with highway capable vehicles on public roadways. But in the future autonomous technology and advances in safety technology could improve safety and lower the costs of safety equipment enough to make MSVs viable.

Polaris Reports Record First Quarter 2015 Results

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Polaris yet again reported record quarterly results with first quarter 2015 sales reaching $1,033.3 million, up 16% compared to the previous year. Operating income increased 19% to $150.3 million during the 2015 first quarter. Currencies in the 2015 first quarter had a $32 million negative impact on total company sales versus Q1 of last year. Here are some of the highlights related to the STOV market. Comparisons are between first quarter 2015 to first quarter 2014, unless otherwise stated. The highlights have been updated following the earnings conference call with analysts.

  • Off-Road Vehicle (ORV) sales, which includes UTVs and ATVs increased 11% to $645.4 million.
  • ORV inventory increased primarily in the ATV segment.
  • Polaris North American ORV unit retail sales were up mid-single digits percent, with consumer purchases of Rangers and RZRs each increasing from the first quarter last year.
  • RZR sales are stronger than Ranger sales but the latter grew “nicely”.
  • North American ATV retail sales decreased low-single digits percent due to heavy competitive promotional spending during the 2015 first quarter with ACE up significantly.
  • Management reports a “fair amount” of wholesale discounting by competitors but this is not expected to continue. Promotional activity is more pronounced for ATVs but is occurring for side-by-sides as well.
  • Management sees the Hammerhead brand acquisition as a good way to attack the value end of the UTV market.
  • North American industry ORV retail sales in the first quarter 2015 increased an estimated mid-single digits percent according to management.
  • Sales of Polaris ORVs outside of North America decreased 10%  primarily due to weak economic conditions in the Europe, Middle East and Africa (EMEA) region, as well as the currency impact of a strengthening U.S. dollar.
  • ORV industry in EMEA region grew mid-single digits in terms of volume but was driven by smaller value products and discounting.
  • Average sales per ORV unit increased 7% in the quarter.
  • The Eicher-Polaris JV will begin shipping the new utility vehicle in Q3.
  • Global Adjacent Markets, which includes GEM, Aixam, Goupil as well as government and military sales, increased 7% to $65.4 million.
  • Government/military group experienced double digit percent sales growth during the 2015 first quarter.
  • Work and Transportation (W&T) group sales (part of Global Adjacent Markets) increased mid-single digits percent with North American W&T sales increasing double digits percent while W&T outside North America declined partly resulting from lower Aixam sales in EMEA due to the impact of negative currencies.
  • North American W&T was up over 30% on strong partnership shipments, national account growth and 40% GEM retail increase.
  • Brutus retail increased low double digits in volume but revenue was hurt by promotions and the loss of some dealers. The PTO and high end models are performing well but base models are underperforming.
  • Goupil and Aixam increased shipments and future orders are up 20% but currency headwinds remain a drag.
  • Aixam made market share gains in a flat industry performance.
  • Defense revenue grew double digits on strength of M RZR in international markets and DAGOR shipments to special forces.

Guidance for the Year

  • Global adjacent market sales are now expected to grow 5% to 10% and total international sales are now expected to decline low single digits percent.
  • ORV’s are expected to increase mid-single digits percent after growing 11% in the first quarter benefiting from a 7% increase in the average sales per ORV unit.
  • Currency changes are expected reduce full year 2015 revenue by $140-160 million.

Learn more:  Seekingalpha.com (Earnings call transcript)

Club Car Offering Solar Panels

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New solar panel offering from Club Car.

New solar panel offering from Club Car.

Club Car is now offering rooftop solar panels for their 48-volt Precedent golf cars, Carryall utility vehicles and Villager LSVs. Customers will now be able to capture store and use solar power with the 100-watt Solar Drive Charging Panel Assembly. Club Car reports that “As a yearly average, the system generates 29 percent of the total energy required to drive eight miles per day in West Palm Beach, Fla.” Customer results may vary depending on how they use their vehicle and where they live. The panels measure 40 inches by 26 inches by 0.2 inches thick and weigh less than 6 pounds. The panels are impact resistant,  have Teflon-like coating to protect the cells and come complete with a controller, connector to the vehicle’s power supply, all necessary hardware and installation instructions. They can be user- or dealer-installed in about 20 minutes. Learn more:  Golfcourseindustry.com

Comment:  Club Car now joins GEM and Evergreen Electric Vehicles in offering a solar option for their vehicles. Evergreen and GEM also offers a SolarDrive product. GEM offers  220 watt and 410 watt systems for $2,500 and $4,000 respectively. Pricing was not provided for the Club Car product.

Polaris Reports 2014 Q4 Earnings

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The new four passenger RZR 4 EPS in Havasu Red Pearl from Polaris.

A constant stream of new models like the new four passenger RZR 4 EPS in Havasu Red Pearl help keep Polaris growing.

Polaris continued on the path of strong growth with another record quarter. Managment reported net income was $135.4 million for the fourth quarter of 2014, up 25 percent from the previous fourth quarters net income of $108.7 million. Sales for the fourth quarter of 2014 totaled a record $1,275.0 million, an increase of 18 percent over last years fourth quarter sales of $1,083.7 million.

For the full year ended December 31, 2014, Polaris reported net income from continuing operations of $454.0 million for the full year 2014, up 19 percent from the previous years net income from continuing operations of $381.1 million. Sales for the full year 2014 totaled a record $4,479.6 million, an increase of 19 percent compared to sales of $3,777.1 million for the full year 2013. Some of the highlights related to small, task-oriented vehicles follow.

  • Off-Road Vehicle sales , which includes ATVs and UTVs or side-by-sides, increased 19% from the fourth quarter 2013 to $781.5 million. This increase reflects continued market share gains on strong demand for both ATVs and side-by-sides.
  • Polaris North American ORV unit retail sales were up low-double digits percent from the 2013 fourth quarter with consumer purchases of side-by-side vehicles up double-digits percent and ATV retail sales up high-single digits percent for the 2014 fourth quarter.
  • Polaris introduced over twenty new MY14.5 and MY15 ORV models in 2014, including the all-new RZR® XP 900 trail and RZR® XP4 900 trail, several new value models, and two models in a newly defined category of single-seat, ride-in ATVs, the Polaris ACE.
  • Polaris extended their market share lead in the North American ATV industry for the fourth straight year with retails up mid-single digits in an industry that only rose slightly.
  • ACE sales accelerated notably in the fourth quarter as marketing and the new 570 model began to impact the marketplace.
  • Four recent model year ’15 introductions include the new electronically fuel-injected RZR 170 and the new RZR 900S4, both of which have already begun to ship.
  • Commercial. Sales increased by over 80% in the fourth quarter driven by initial Ariens-Gravely supply vehicle shipments, strong national accounts growth and notably improved BRUTUS and Bobcat retail performance.
  • In the Small Vehicle division which includes GEM, Aixam and Goupil, fourth quarter revenue declined 11% due to the weak French economy afflicting both Aixam and Goupil. For the full year 2014, sales increased 28% fueled by Aixam market share gains and increased sales from both our GEM and Goupil businesses.
  • Polaris significantly outperformed in the ORV market in Europe.
  • For 2015 management expects ORV is expected to grow mid-single digits, driven by new products but offset by further implementation of RFM, their new inventory management program, and slower international demand.

Learn more:  Seekingalpha.com (earnings call transcript)

Comment:  Polaris continues to dominate the market, although like other manufacturers they have been hurt by slower sales in Europe and in countries like Russia. Expect more of the same in 2015 as they continue to rollout products to segment the market and cover a range of price points. They are likely to add more models for their push into the commercial segment as well.

Polaris Reports Strong Quarterly Earnings for Q3 2014

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New 2015RZR XP 1000 EPS Desert Edition

RZR XP 1000’s like the new 2015 RZR XP 1000 EPS Desert Edition helped drive sales.

Polaris reported an 18% year over year increase in revenue for third quarter 2014 driven by increases in their motorcycle, PG&A and Off-road Vehicle (ORV) divisions. ORV which includes side-by-sides and ATVs recorded a 17% increase. With another strong quarter, management raised their guidance for full-year results in 2014. Some highlights of the earnings call as it relates to Small, Task-Oriented Vehicles include:

  • ORV revenue up 14% year-to-date
  • Market share gains in the quarter for both side-by-sides and ATVs in North America adds to their #1 positions
  • ORV revenue was driven by side-by-sides that outpaced the industry believed to be growing at 10%
  • The 2 and 4 seat RZR XP 1000’s as well as the RZR 900 Trail are selling well
  • In the commercial UTV segment Brutus retail sales continue to grow sequentially and year-over-year for both Polaris and Bobcat
  • Commercial national accounts and fleet sales were strong
  • The Gravely Atlas UTV was launched in the quarter
  • Defense related ORV revenue was flat for the quarter but up 25% year-to-date with international sales of the MRZR contributing
  • The Small Vehicle division reported an 8% revenue increase in the quarter due to GEM and Aixam
  • Year-to-date Small Vehicle revenue is up 52%
  • GEM reported retail sales increase of 20% on action in B2B and GSA sales
  • While Aixam grew despite a weakening European market, Goupil revenue decreased with softness in the French economy, their major market
  • The Opole, Poland factory opened and will produce ORV and other products for the European and Middle East markets
  • International sales were helped by strong ORV sales in India and Australia
  • Currency issues provided some headwind in foreign markets

Learn more:  Seekingalpha.com (earnings call transcript)

Comments:  Despite some macro economic issues the Polaris juggernaut keeps on rolling as they continue to add market share despite increased competition in the side-by-side and ATV markets. Their large market share and subsequent production volume gives them an advantage in driving down vehicle costs and provides funding for their robust R&D budget and new model pipeline. The large number of models they market allows them to target specific sub-segments with specific vehicle capabilities and characteristics. In turn this makes it more difficult for competitors to match up on a vehicle to vehicle basis in each sub-segment.

GEM Adds Gas & LSV Utility Vehicles to Their Product Lineup

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The new 2015 Polaris M1400, a gas powered utility vehicle being sold by GEM dealers.

The new 2015 Polaris M1400, a gas powered utility vehicle being sold by GEM dealers.

GEM adds an LSV version of the electric eM1400 for 2015.

GEM adds an LSV version of the electric eM1400 for 2015.

The GEM brand of transport and light utility vehicle, owned by Polaris Industries,  recently expanded their product lineup to include a gas powered M1400 and a street legal version of the electric eM1400, the eM 1400 LSV. The eM1400 was introduced last year. The press release follows below with more details. The base MSRP for the M1400 is $7,999 and for the eM1400 LSV is $10,999, which is $1,000 more than the eM1400.

What’s interesting from a marketing perspective is that the gas-powered M1400 is carrying the Polaris brand but is available from GEM dealers and is included on the GEM website. While GEM has always been associated with electric powered vehicles, the distribution network and brand have a strong presence in commercial and institutional venues such as colleges, universities, municipalities and parks where customers are purchasing gas and diesel powered STOVs as well. GEM’s established distribution network and experienced commercial/institutional oriented sales force is an important asset. Polaris is trying to leverage this strength to sell more non-electric commercial vehicles but, at least for now, maintain a distinction between the electric GEM brand and non-electric vehicles. This expansion will also broaden the competition between Polaris and the golf car manufacturers that are already selling both electric and gas vehicles into these markets. Historically Polaris has attacked markets by segmenting them and creating models for specific sub-segments. It is likely that they will continue to add more gas-powered vehicles as well as electrics to be sold under the GEM umbrella.

GEM® Extends Offerings for Dealers with New Gas and LSV Models

Gas-powered Polaris® M1400™, electric eM™1400 LSV now available through nationwide dealer network

 MEDINA, Minn. (Aug. 21, 2014) – Polaris® Industries Inc. (NYSE: PII) has expanded its GEM® line product offering of transport and light utility vehicles to include the new Polaris® M1400™ gas-powered commercial side-by-side utility vehicle and the GEM eM™1400 LSV street-legal electric utility vehicle.

 As the first gas-powered utility vehicle available for purchase through authorized GEM dealers, the Polaris M1400 is a 4×2 vehicle designed specifically for light-duty commercial utility applications. The vehicle is equipped to handle the demands of a jobsite with 1,400 pounds of payload, a cargo box capacity of 1,100 pounds and the ability to tow up to 1,500 pounds.

 “Our number one priority at GEM is to help customers find the right solution for their unique needs,” GEM General Manager Tim Blinkhorn said. “It is very common for accounts to require a fleet with a mix of electric and gas-powered vehicles. By adding a Polaris engineered gas utility vehicle to our line with an extensive range of accessories, GEM dealers are ready to provide the best tool – electric or gas – for the job.”

 The M1400 features a Polaris ProStar 31-horsepower engine with electronic fuel injection and reaches a top speed of 26 mph, which can be limited with the optional Polaris Speed Key. Independent rear suspension and front IFS MacPherson Strut ensures the safe and efficient transport of people and cargo even when hauling at maximum capacity.

 On the electric front, the GEM eM1400 LSV has all the features of the eM1400 introduced last fall, and is also LSV compliant with a horn, headlights/taillights, turn signals, an automotive-grade windshield, a windshield wiper and three-point safety belts.

 Like all of GEM’s street-legal models, the eM1400 LSV reaches a top speed of 25 mph, produces zero emissions, can be driven indoors or outdoors and on most city streets with posted speed limits of 35 mph or less.  

 Available options and accessories make it easy for customers to configure the Polaris M1400 and GEM eM1400 for their specific jobsite application and unique needs. Factory installed options include removable bed sides and a fully enclosed max box. Additionally, both utility vehicles support Polaris’ innovative Lock & Ride® and Lock & Work™ accessories.

 The Polaris M1400 and GEM eM1400 come with a two-year limited warranty and can be ordered through more than 250 authorized GEM dealers in North America. To set up a test ride, or for more information on the complete Polaris GEM lineup, visit GEMcar.com.

Polaris Industries Inc.         Media Contact: Megan Langenkamp
2100 Highway 55              Phone: 414-292-0246
Medina, MN 55340-9770  mlangenkamp@n-s.com

 

GEM Now Offers Solar Panel Option

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GEM now offers a solar panel option for their models.

GEM’s new solar panel option for their models.

As part of their 2015 product line launch, GEM recently rolled out a solar panel option to supplement vehicle charging. GEM is offering two solar panel models, the Ra Power Pro 220 and Ra Power Pro 410 which provide 220 to 410 watts of energy daily to the vehicle’s battery system. The panels are manufactured by SolarDrive US and include their Maximum Power Point Tracking (MPPT) controller that has been specifically designed and programmed to work with GEM’s 72 volt battery set systems.

The panels can be factory installed when ordering 2015 GEM models:   e4, e4S, e6®, e6®S, eL and eL XD. They can also be retrofitted by dealers for 2005 and newer models.  Learn more:  Polaris.com

Comment:  The solar panel option could be particularly popular in the College/University and Parks market segment and with other commercial buyers that have green or sustainable initiatives. For dealers this option could be a nice little add to their revenue. The installed base of older GEM models at these institutions offer an opportunity for retrofitting whole fleets.

Polaris Reports Record Quarterly Results – Gains Market Share

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Beauty shot of the new Sportsman ACE from Polaris.

The Sportsman ACE, one of the many different vehicles that helped drive record quarterly performance for Polaris.

Polaris Industries reported record second quarter results with sales of $1.014 billion and net income of $96.9 million. Sales increased 20% from Q2 2013 and net income 21%. Key drivers were an increase of 15% in North American retail sales with strength in ORV and motorcycle products. Management also raised their full year guidance to a 16-18% increase revenue. Here are some highlights from the earnings call with a focus on small, task-oriented vehicles:

  • ORV sales increased 13% for the quarter to $701.5 million
  • Guidance for full year:  up 11%-13%
  • Side-by-side sales up low teens % and outpaced the market
  • Polaris gained market share in side-by-sides and ATVS
  • Sportsman ACE is selling well and customer data to date indicates that it is reaching a new market segment
  • New ORV models will be announced shortly
  • Promotion environment for side-by-sides remains aggressive
  • Small Vehicle sales increased 29% to 43.5 million
  • Aixam Mega sales up over 40% in Q2
  • GEM and Goupil sales combined increased 6%
  • New products will be announced in the second half of the year
  • Small Vehicle sales guidance for the year:  up 25%-30%
  • In the commercial segment Brutus sales are below expectations as the company tackles the B2B sales process but Bobcat and National Account sales did well.
  • International sales increased 29% in Q2 to $170.5 million driven, in part, by side-by-side sales in many regions

Learn more:  Seekingalpha.com (Earnings call transcript)

Comment:  Polaris continues to operate on nearly all cylinders and will be shortly rolling out new products. Their only weakness appears to be in the commercial segment. It is telling that Bobcat and national accounts did well in the quarter but the Brutus  retail sales, while improving, remained below expectations. This points to the continuing mismatch between the majority of Polaris’s distribution network and the commercial customer the Brutus is targeting. Most of their current dealers are accustomed to a different consumer-oriented sales process. Management is likely to pursue additional marketing partnerships in this segment to bolster commercial sales while trying to assist, train and bring more of their traditional dealers up to speed in this segment. But this is nitpicking, the company continues to roll in competitive markets and is even exceedng high expectations.