Category Archives: Management

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)

BRP Earnings Call Highlights – FY 2014 Q2

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The Can Am Maverick Side-by-Side helped drive quarterly sales growth for BRP

BRP, manufacturer of Can Am side-by-sides and other products recently reported its financial results for the three and six-month periods ended July 31, 2013. What follows are some of the highlights with a focus on utility vehicles.

  • Revenues excluding sport boat figures increased to $620.9 CAN compared to $583.1 for the same quarter last year
  • Revenue for the quarter are up 6.5% in year over year comparison excluding sport boat sales.
  • Growth, in part, was driven by sales of the Maverick side-by-side
  • International sales up 14% with the off road vehicle segment which includes ATVs and side-by-sides up 35%
  • Solid performance for side-by-sides in Europe, Australia and Latin America.
  • 35 to 40 new dealers in North America this year
  • North America side-by-side industry grew mid double digit with BRP growing more than 30% in the 2013 season ending june 30 with a particularly strong 2nd quarter
  • 50% growth in ORV parts and accessories with good growth in Maverick parts and accessories sales
  • White Mavericks proved more popular than yellow Mavericks resulting in a change in production
  • Just started shipping the Maverick 4 seater which has received good comments and strong orders from dealers
  • Of all their products which includes the Spyder, snowmobiles, personal watercraft, ATVs and side-by-sides the side-by-sides stand out as a strong driver with an overall market that is outpacing the other product categories
  • Management remarked that although there have been a number of new product introductions in the UTV market, nothing is a game-changer and they believe their products are very competitive

 

 

Arctic Cat Reports Strong Quarterly Results

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Arctic Cat Wildcat Side-by-Side helps drive strong quarterly results

Arctic Cat, manufacturer of snowmobiles, ATVs and the Wildcat side-by-side, announced strong results for the first quarter ending June 30, 2013 of their 2013 fiscal year. The following are some of the highlights of the earnings call with analysts with a focus on UTV/side-by-side issues.

  • Net sales for the first quarter increased nearly 9% to 120.8 million versus 111.3 million for the same quarter last year. Sales growth was driven by increased sales across all product lines.
  • ATV and Side by Side sales increased 5% to 76.3 million versus 73 million
  • Key drivers for the sales increase were the Wildcat X high-horsepower sports Side by Side and the Wildcat four seat model, both of which started shipping during the fourth quarter of last fiscal year.
  • While retail ATV sales underperformed the overall industry, North American Side by Side retail sales experienced strong growth and gained market share with Wildcat retail sales increasing 47%.
  • The new model year 14 lineup which will include some new models that will allow Arctic Cat to enter some new market segments will be announced in a few days.
  • Arctic Cat plans to continue to launch new models each quarter of this fiscal year including the Wildcat 50 trail version that was announced last February. (The new models could be ATVs, side-by-sides or snowmobiles)
  • Management expects new products to help grow the ATV and Side by Side business between 25 and 29% for the fiscal year.
  • Expansion of our Wildcat Side by Side lineup will contribute to increased PG&A sales this fiscal year.
  • During the quarter, R&D expenses increased 18% as product development is a focus.
  • Management sees potential to grow their share of the recreational off road market and some of the new products being launched will take the company into new market segments.

Learn more:  Seekingalpha.com (earnings call transcript)

Comment:  As evidenced by Arctic Cat’s recent and planned model introductions, the competition in the UTV/side-by-side market continues to heat up. It will be interesting to see what new market segments they will be targeting. Similar to Polaris, they are looking to diversify their product line and segment coverage. Going forward the competition should be good for consumers, lowering costs and/or improving the value for their purchasing dollar with more features and better performance. For manufacturers, it may hurt profit margins and/or put more pressure on them to keep innovating and launching new models.

BRP Earnings Call Summary

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Can Am Maverick Side-by-Side

BRP, manufacturer of Can-Am products including Maverick and Commander UTVs, recently had an IPO and is now a publicly traded company.  They reported their first quarter earnings several weeks back and here are some of the highlights with a focus on UTV related information.

  • 12% growth in comparable revenue to Q1 fiscal year 2013, which was driven primarily by a 27% growth rate in year-round products, mainly coming from strong side-by-side revenues and increased roadster sales.
  • Double digit retail growth for combined Can-Am Recreational Side-by-Side and Spyder.
  • Deliveries of the new Maverick Side-by-Side vehicle began with in the first quarter very good sell-through at the dealership.
  • On the retail side, the US recreational side-by-side industry grew high single digits, while our North American side-by-side sales grew high double digit.
  • Reported revenues of C$804 million, an increase of 5.5% over the same period in fiscal ’13, representing a record level for the Company in the first quarter.
  • Have added 35 to 40 dealers in the South and Southwestern US as part of a plant to add 200 to 300 dealers in the same areas within the next four years.

Polaris Forging Ahead in the Indian Market

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Managing Director Pankaj Dubey of Polaris India

An Indian vehicle website recently posted an interview with Mr. Pankaj Dubey, Managing Director of Polaris India Pvt. Ltd. in which they discussed Polaris’s activities in the Indian market. Polaris entered the market in 2011 and have undertaken a number of efforts to grow the business. Here is a summary of the interview highlights and key marketing initiatives.

  • Participating in off-road racing events
  • Partnering with entrepreneurs to set up 16 Polaris Experience Zones in Indian cities to expose more people to off-roading
  • Their top five markets are Delhi, Mumbai, Bangalore, Chennai and Hyderabad
  • Efforts to market to police, parks departments, fire departments, etc are progressing
  • The product offerings in India include ATVs, UTVs, snowmobiles, and the Indian and Victory Motorcycles are likely to be added but not for at least a year
  • There are currently 14 Polaris dealerships with plans to reach 50 by year end 2016
  • The company is lobbying government agencies to allow more road access for ATVs and UTVs

Learn more:  Cardekho.com

Comment:  Increasing international sales has been a key strategic initiative for Polaris so it is not surprising that they are looking to expand aggressively in the next few years in India. In general foreign companies are eyeing the country’s growing middle class to power spending on goods and services. While some estimates put the middle class at about 300 million people, the upper range of this segment is where most of the spending is likely to come and that translates into about 50 million consumers. The middle class is expected to grow strongly in the coming decades. Learn more:  NYTimes.com

Arctic Cat Earnings Call Highlights – F4Q 2013

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Arctic Cat Wildcat Side-by-Side

The following are some of the highlights from Arctic Cat’s earnings call for their fiscal 2013 fourth quarter ended March 31, 2013 with an emphasis on side-by-side related information.

  • Net sales for the fourth quarter increased 15% to $113.2 million from $98.5 million
  • Full year net sales increased 15% to $671.6 million from $585.3 million
  • Net earnings increased 33% to $39.7 million from $29.9 million
  • ATV and side-by-side sales increased 32% to $299.8 million from $226.9 million for the year and increased 16% to $87.6 million from $75.8 million for the quarter
  • ATV and side-by-side business sales increases were driven by Prowler models as well as the launch of the new Wildcat Four, a new four seat version of the Wildcat Four side-by-side and Wildcat X a high horsepower version of the Wildcat Sports side-by-side
  • Management reports taking more market share in the side-by-side category during the year
  • Wildcat parts and accessories business was strong
  • ATV industry retail sales for North America were flat as retail sales decreased by 2% during fiscal year 2013.
  • The new 50 inch trail legal Wildcat is expected to ship in the 4th quarter of 2014 and allows Arctic Cat to enter this segment of the side-by-side industry
  • Next year the North American ATV industry retail sales are expected to grow between zero to 5%
  • The side-by-side market is expected to grow in the 15% to 25% range.
  • Management expects net sales in the range of $754 to $768 million based on an increase in ATV and side-by-sales in the 25% to 29% range for the full year driven by shipments of Wildcat sport side-by-side models including the new Wildcat 50
  • Management expects at least 90% of our dealers to pick up the trail version of the Wildcat

Complete earnings call transcript:  Seekingalpha.com

Highlights from the Polaris Earnings Call – Q1 2013

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The following are the highlights of the Polaris earnings call for their first quarter 2013 earnings report as it relates to the STOV market.

  • Total sales for the first quarter increased 11% to a record $754.9 million
  • First quarter net income increased 26% to $75.5 million
  • Gross profit margins were up a modest 10 basis points to 29%
  • Full year sales expected to be up 12% to 15% over 2012.
  • Polaris’ first quarter Off-Road Vehicle (ORV) revenue increased 7% driven by side-by-side sales.
  • In the first quarter consumer demand for the RANGER 900XP outpaced all other ORVs in the industry.
  • Polaris gained market share in both ATVs and side-by-sides.
  • ATVs down low single digits and for industry as well
  • Polaris side-by-side retail grew mid-single digits in an industry estimated to grow low single digits.
  • The new RZR XP 900 Jagged X has been a hit with consumers
  • Major strategic initiatives included launch of Brutus commercial line, acquisition of Aixam and start of plant construction in Poland
  • Brutus line will be sold through dedicated new Polaris commercial channel that already includes 400 dealers
  • Initial orders for both the Brutus product and the attachment have been better than are than expected.
  • Small vehicle business consisting of GEM and Goupil grew double digits
  • GEM and Goupil both had good quarters, as GEM retail more than doubled in its best first quarter since 2008, while Goupil retail orders were up about 20%, significantly outperforming the European economy.

Looking Forward

  • Sales of Off-Road Vehicles are expected to increase in the 8% to 10% range, with retail sales of side-by-side vehicles and ATVs outpacing the overall market in North America and internationally.
  • Management expects to increase ORV market share in 2013 although at a more moderate rate than the past 3 years.
  • Management optimistic about new model introductions for model year 2014
  • Poland facility to be online in the 2nd half 2014 mainly for producing ATVs for the European market with some side-by-side capability as well.
  • Management expects to realize sourcing and engineering synergies between Goupil, Aixam and Gem
  • Goal is to decrease the delivery time of for side-by-side products to dealers from 6 weeks down to 4 weeks

Learn more:  Seekingalpha.com (earnings call transcript)

Polaris Reports Another Strong Quarter

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Ranger XP 900 helped drive Polaris sales in Q1 2013

Polaris reported strong financial results for the first quarter of 2013. Management reported sales of $745.9 million and net income of $75.5 which were 11% and 26% higher than the prior year’s first quarter, respectively. A major contributor to the record earnings was a better winter for the snowmobile business compared to the previous winter.  The off-road division, which includes side-by-sides, increased revenue by 7% compared to the Q1 2012 on the strength of new products and mid-size utility vehicles like the Ranger XP 900. Management also raised their full year projections, forecasting an increase of 15 to 18 percent from 2012 earnings and sales for the year to grow around 12 to 15 percent, up from its previously projected increase of 7 to 10 percent. Learn more:  TCBmag.com

Can-Am Manufacturer BRP Planning IPO

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BRP, the Canadian manufacturer of powersports products including Can Am side-by-sides, ATVs and watercraft as well as Ski-Doo snowmobiles is planning an initial public offering (IPO) on the Toronto Stock Exchange. Ten years ago Bombardier sold the business lines to private investors, the largest being private equity firm Bain Capital with about a 50% stake. The remaining shareholders include the founding family run Beaudier Group with around 35% of the company and pension fund manager Caisse de dépôt et placement du Québec with around 15%. According to the prospectus, “The three shareholder groups are staying invested in the near term and will control all of the company’s multiple-voting shares,….The offering is for subordinate voting shares, which have one vote each compared to the six votes for the multiple-voting stock.”

Originally an IPO was to be completed about five years ago but the recession put it on hold.  Now, with side-by-side market leading the way, the environment is much more favorable as evidenced by the recent stock runs of Polaris and Arctic Cat. The company plans to raise $250 million with the IPO. The funds raised will primarily be used to   payoff debt. According to company financials BRP had sales of $2.9 billion and profit of $121 million for the last fiscal year that ended on January 31, 2013. Learn more:  Financialpost.com

First Polaris & Bobcat Co-Developed Commercial UTVs Roll Off the Line

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Bobcat & Polaris executives join workers at Milford, IA factory to celebrate the first commercial UTVs to roll off the production line.

Executives from Polaris and Bobcat made an appearance at the Milford, IA assembly plant to commemorate the first Bobcat 3600 and Bobcat 3650 and Polaris BRUTUS models to roll off the production line. The commercial UTVs are the result of a strategic alliance between the two companies to co-develop products. The alliance leverages Polaris experience in utility vehicles and the powersports market, and Bobcat’s experience in work vehicle technology and attachments. Bobcat also brings to the table extensive knowledge of commercial customers and a dealer network to reach that segment.  Learn more: SXSNews.com