Category Archives: GEM

Polaris 4Q 2012 Earnings Report & Conference Call

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Last week Polaris reported another strong quarter and year for 2012. They continue to lead the UTV market and are now making inroads in the LSV market with their GEM acquisition.  Polaris increased fourth quarter sales 15% to a record $900 million. Fourth quarter net income and earnings per share both increased 38% to $88.1 million and $1.24 per share, respectively. Full year 2012 sales increased 21% to a record $3.2 billion and net income increased 37% to $312.3 million. Net margins reached a record 9.7% and earnings per share rose $4.40, up 38%. Several days after the call management announced that the quarterly dividend would be raised by 14% to $0.42 a share. Some other highlights from the conference call:

  •  Revenue in the Off-Road Vehicle (ORV) segment grew 22%, powered by over 20% growth in North American side-by-side sales which outpaced the expansion of the overall market that was estimated at low teen percent.
  • While fourth quarter wholesale sales to Bobcat decreased, the full year retail sales there increased upper-single digits. 2012 milItary segment sales were flat.
  • Sales from GEM and Goupil increased over 50% in the fourth quarter with GEM up double-digits and orders up even more as distribution increased and a revamped 2013 model line-up was introduced. 
  • Overall revenue is expected to increase 7-10% in 2013 with net income and earnings per share projected to increase in the range of 10% to 15% over 2012.
  • The management expects a slowdown in the rate of growth in the UTV/side-by-side market but still expects the overall market to grow.
  • Sales of Off-Road Vehicles are expected to increase in the high-single digits percent range with retail sales of side-by-side vehicles and ATVs continuing to outpace the overall market, both in North America and internationally.
  • Europe and Middle East sales in the ORV market are expected to decline because of economic conditions.
  • A new $50 million manufacturing facility will begin construction in Europe in the first half of 2013 to cut costs, better match products to the local markets and alleviate anticipated production constraints in current facilities. It will be a 325,000 square foot facility for welding, painting and assembly of ATVs and UTVs. Production will begin in the second-half of 2014.
  • An India plant will also be built as part of their joint venture with Eicher with production expected to begin in 2015.
  •  The new RZR XP900 Jagged X was well received by dealers and sold out of it’s initial allotment within 24 hours.
  • Over 150 GEM dealers were added in 2012  and 2013 revenue is expected to grow double digits with a focus on growing B2B customers.
  • For Goupil, a new G5 hybrid product is launching in 2013.

Read the earnings call transcript:  Seekingalpha.com

Polaris Recalls GEMs and Ranger 400 Vehicles

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Polaris has issued voluntary recalls of some GEM low-speed vehicles and Ranger 400 utility vehicles.

GEM Recall – Polaris acquired GEM in April 2011 and has been tracking a warranty issue with the parking braking assembly which has now led to a recall in conjunction with NHTSA.  Certain assembly components can “…wear prematurely and prevent the brake from engaging.” and potentially lead to the vehicle rolling away after the driver exits. The recall includes the following 2010 to 2013 GEM models manufactured between January 14, 2010 and November 23, 2012:  E2, E2 XLD, E2L, E2S, E4, E4S, ELXD EL E6, E6S and ES.  The recall covers a total of 4,394 vehicles.  The recall is expected to start in February and Polaris will notify owners.  Dealers will replace the parking brake lever assembly free of charge.  Polaris customer service can be contacted at 1-888-704-5290.  Learn more:  NHSTA

Ranger 400 Recall  – In cooperation with the CPSC Polaris is recalling 327 2013 Ranger 400 utility vehicles because the vehicle’s throttle can fail to operate properly, possibly causing the loss of vehicle control.  To date there have been no report of injuries related to the issue.  The vehicles were sold between July and September 2012.  The recall affects 2013 Ranger 400 vehicles with model number R13RH45AG and VIN numbers between 4XARH45A3D4726305 and 4XARH45A7DE648444 however not all VIN numbers in the range are included in this recall.  Owners can conduct a VIN-based search for recall information at the Polaris website.  Polaris is contacting owners directly to schedule a free repair.  Vehicles should not be used until repaired.  Polaris can be contacted at (888) 704-5290, from 8 a.m. to 5 p.m. CT Monday through Friday.  Learn more:  CPSC.gov

 

Polaris Introduces 2013 GEM Lineup

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2013 GEMeL XD with dual tool box option

Polaris announced their 2013 line of GEM vehicles which include a variety of improvements.  The 2013 lineup features the GEM e2, e4, e6, eS, eL, and eL XD models with starting MSRPs of $7,829 to $13,459.  The company borrowed technology from their powersports products for some of the improvements.  Key changes include:

  • High-low beam headlamps
  • Day-night mirror to reduce reflective glare.
  • Improved front brakes, suspension, steering and foot pedals
  • Factory-installed MAX BOX with cargo doors and a dual tool chest option for select utility vehicles
  • Updated color options
  • Charging cordsets for international markets

New hard doors with better sealing and locks are expected to be available in 2013. Learn more:  Government-fleet.com

Polaris Continues EV Strategy With E-Bike Offering

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Several years ago Polaris made a strategic decision to enter the electric vehicle market and has continued to execute on that strategy with their recent introduction of electric bicycles in partnership with EVantage.  Leaving larger-sized electric vehicles for other manufacturers, Polaris has targeted smaller electric vehicles such a LSVs/NEVs through their GEM acquisition, small utility vehicles through their Goupil Industry SA acquisition, electric motorcycles with their Brammo investment and now e-bikes.

Launched last week at the bicycle industry trade show, Interbike, the e-bike offerings include three product lines with a total of seven models.  The Vector, Strive and Meridian lines target trail/all-around applications, touring and urban commuting respectively.  Key features of the e-bikes include:

  • DuoDrive motor technology that allows for switching between speed or higher-torque settings automatically to adjust for riding conditions
  • Re-generative braking
  • IC dashboard including a carbon footprint readout
  • Ability to use pedal assist or throttle control while riding

Comment: The EV strategy is also a strategy for Polaris to expand into and grow international markets.  While all these vehicle types have a market in the US, their is currently greater potential for these vehicles internationally such as in Europe and India for small, urban utility/cargo vehicles and electric bikes in Asian markets.

Learn more:  Powersportsbusiness.com

What’s Cooking On The STOV

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

Border Patrol – Customs and Border Protection will be adding two UTVs and three ATVs to their fleet.  The UTVs, Polaris Ranger 800 HD with plows, blades and other accessories, will be used near Spokane, WA and the ATVs in Maine.  Learn more:  GSNmagazine.com

Pitt Community College Buys GEMs

Campus Transportation – One of the major market segments for LSVs is college campuses.  Pitt Community College recently expanded their campus and needed a versatile option for staff to move around the ground.  Their choice was a pair of GEM LSVs.  Learn more:  Reflector.com

All Purpose Farm/Mining Vehicle – In Australia the farm segment is showing the same trend as in the US:  the replacement of ATVs by UTVs.  Key factors driving the switch are ease of use and more productivity compared to ATVs.   Demand for vehicle accessories for this segment is increasing as well.  A Polaris retail manager states that 80% of sales in Queensland and the Northern Territory is for farming.  The other important segment in this area is mining where an accessorized UTVs offer a much cheaper alternative to traditional Landcruisers.  Learn more:  SL.farmonline.com.au

Polk County Sheriff uses Mule for bike trail patrol

Bike Trail Patrol – The Polk County Sheriff’s Office in Iowa is using a Kawasaki Mule to patrol bike trails this summer.  The Mule gives them access to areas that their other cars cannot reach while at the same time allows them to carry gear and supplies or an injured person, which is not possible with a motorcycle.  Learn more:  Blogs.Desmoinesregister.com

News Briefs

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Polaris Adds Jobs – Polaris will be adding 89 jobs in their Osceola, WI plant for work related to their Indian Motorcycle and GEM product lines that were acquired last year.  Work at the plant will include engine production for motorcycles and R&D for GEM vehicles.  The company has also added 200 jobs over the last 18 months at their Spirit Lake facility which is ramping up to full production of Indian motorcycles and GEM vehicles.  Learn more:  Startribune.com

Campus Sustainability Drives Electrics – Washington State University is another example of how sustainability initiatives on campus are driving electric STOV purchases.  The university recently purchased the three GEMs for transportation and general fleet use.  The vehicles help the university meet the governor’s mandate that state entities reduce their carbon footprint.  Learn more:  News.wsu.edu

A Case For NEVs/LSVs – In this brief interview an author in the renewable energy space makes the case for NEVs/LSVs and the role for STOVs.  Learn more:  2greenenergy.com

UTVs Help Drive Strong Earnings At Polaris

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Polaris reported strong first quarter earnings for 2012 with record sales of $673.8 million.  Key sales drivers were Ranger and RZR UTVs and Victory motorcycles across global markets.  Some key takeaways from the earnings call:

  • First quarter net income increased 27% to $60.1 million
  • Earnings per share increased 27% from the prior year period to $0.85
  •  32% improvement on operating profit
  • Management expects sales and earnings for 2012 to surpass previous guidance with full year sales guidance to up 13% over 2011 and full year earnings per share are now projected to be $3.85 to $4.00 per share, an increase of 20% to 25% over 2011.
  • Off-road Vehicle business revenue grew 30% in the first quarter.  This includes side-by-sides and ATVs.
  • Polaris gained market share in both ATVs and side-by-sides.
  • Side-by-side retail sales grew at over 30% in North America for Polaris compared to low teens for the overall market with strong performance across all segments
  • Bobcat has reported dealer retail sales increases of upper single-digits in the first quarter
  • Expect a new Bobcat product  in the coming months for both Polaris and Bobcat channels. “This should be a significant capability change from products we’ve offered traditionally.”
  • Management believes they can leverage their strengths in distribution, product cost and product innovation to drive growth in their GEM and Goupil acquisitions. They see the global small electric vehicle market as a growth area and note “… certainly we think we’re not done building out that portfolio.”
  • In Europe under tough conditions Polaris outpaced the overall market with particular strength in France.  Northern Europe is more of a work vehicle/Ranger market while Southern Europe sees more recreational vehicle/RZR sales.

For earnings call transcript:  Seekingalpha.com

Polaris Reports Record Financial Results Again

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Showing strength across all product lines Polaris Industries reported record fourth quarter and full year profits on Wednesday.  For the fourth quarter sales increased 26% from 4Q 2010 to $782.0 million and for the full year sales increased 33% from 2010 to $2,656.9 million. Other full year highlights include:

  • Increased market share for all product lines
  • 39% increase in international sales
  • Net income of $227.6 million – 55% more than 2010.
Their Off-Road Vehicle (ORV) segment increased sales 32% over 2010 to $1.82 billion.  The segment includes ATVs and side-by-sides.  Management reports ATV unit retail sales growing upper single digits percent and side-by-side vehicle unit retail sales increasing about 20 percent over the prior year.  Polaris continues to gain market share in each segment.  Learn more:  Marketwatch.com
Earnings Call highlights:
  • The overall ATV market declined low double digits for 2011 while side-by-sides increased low double digits.
  • Polaris sales through their partnership with Bobcat increased 60% in 2011.
  • Polaris has discontinued their Breeze LSV in light of their GEM acquisition and production of GEMs in their Spirit Lake facility has begun.
  • Asia Pacific and Latin America are the key global markets
  • Expectations for a slower level of growth for the company and ORV sales for the coming year.
  • New products with Bobcat likely in end of 2012 or early 2013
  • Strong growth in military segment expected with sales to special forces and in unmanned technology products

 

GEM Fargo Factory Being Liquidated

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The original Fargo, ND GEM factory will be liquidated starting December 6th.  After acquiring GEM, Polaris Industries moved GEM production to their plant in Spirit Lake, IA.  Items available for sale include “…excess Global Electric Motorcars vehicles, tools, equipment, office furniture, pallet racking, and a state of the art production line installed in 2003.”  Liquid Asset Partners will be conducting the liquidation.  Learn more:  PRWeb.com

Polaris Makes Another Move In The EV Market – Acquires Goupil Industrie of France

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Goupil industrie electric truck

Goupil Industrie electric truck

Diversifying their portfolio of electric vehicle offerings, Polaris Industries recently purchased Goupil Industrie SA.  The privately owned French manufacturer produces a line of light duty electric trucks for a variety of commercial uses.  There were no comments by management on whether the Goupil product line would be exported to or produced in the US.

This is the third major transaction in the small electric vehicle space by Polaris this year following the acquisition of GEM and a major investment in Brammo, an electric motorcycle manufacturer known for electric powertrain expertise. The work and hauling oriented Goupil product line will complement the more people mover oriented GEM line.   Goupil’s estimated annual sales of $25 million adds to the estimated $30 million in annual sales that Polaris gained from the GEM acquisition.

Comment:  After testing the LSV market with their Breeze model for personal transportation and the electric UTV market with their electric Ranger, Polaris has now moved decisively into the space.  Management sees the global market for small electric vehicles as a growth area and have executed on that belief by purchasing this manufacturer in France and initiating GEM distribution in India.  Polaris now has a range of small EV product offerings spanning off-road and on-road, consumer and commercial, as well as work and transportation applications.  Learn more:  BizJournals.com

In related news, I noticed that Polaris also has a new website for GEM.  On their home page it is accessible under the tab “Low Emission Vehicles” along with the Breeze LSV.