Polaris Reports Q1 2016 Earnings

Posted on April 22, 2016 by Marc Cesare

One of the Polaris RZR models involved in the large first quarter vehicle recall.

Polaris reported earnings for the first quarter 2016 fiscal year with sales and earning declining for the second consecutive quarter. Revenue was down 5% to $983 million driven by inventory management and currency impacts. Earnings per share was down a significant 45% with currency, volume and mix and considerable legal and warranty costs more than offsetting leaner operations. The following are some of the highlights related to the small, task-oriented vehicle market.

Polaris is recalling more than 160,000 RZR vehicles to address fire and other thermal risks. This figure appears to include vehicles outside the US as the CPSC reported a figure of 133,000.
Management expects to “…address all of the recalled vehicles within the quarter…” and emphasized their commitment to resolving the issue quickly.
Side-by-side dealer inventory declined upper single digit percent in the quarter.
Year-over-year (YOY) North American side-by-side retail decreased slightly in an industry up mid to high single digits, so some market share was lost.
Management is positive about the performance of the new GENERAL product line and reports cannibalization of Ranger and RZR lines is not significant.
Side-by-side market remains weak in oil producing states but overall management is optimistic about the ORV (ATV & side-b-side) industry.
Management reports higher variability from month to month and regionally in the ORV market.
The Global Adjacent Markets business unit saw a 8% decrease in revenue with strength in Aixam, national accounts and GEM offset by weakness in Bobcat and Brutus. Defense business (MRZR and Dagor) declined “significantly” due to tough comparables but the order backlog is up.
The European ORV industry grew low single digits in the first quarter, with Polaris retail outperforming, up mid-single digits.
Multix retail and distribution, while still relatively small, are on plan through the first quarter. Multix is a small multi-purpose vehicle for the Indian market.
Ranger production will begin in the second quarter at the new Huntsville, AL plant, which should provide significantly better operating efficiencies and better inventory and retail flow management.
Management expects Global Adjacent Markets to be up in the high single digits percent range, reflecting the recent acquisition of Taylor-Dunn and ORV/Snowmobile sales to be down low to mid single digits.

Learn more: Seekingalpha.com (earnings call transcript)

Polaris Recalls 133,000 RZR 900 and 1000 Vehicles

Posted on April 20, 2016 by Marc Cesare

Polaris announced a massive recall of approximately 133,000 RZR 900 and RZR 1000 side-by-side vehicles covering model years 2013 to 2016 because of a potential fire and burn hazards to drivers and passengers. The recall covers a wide range of RZR 900 and RZR 1000 model variations (a few are pictured above). The following information is from the Consumer Product Safety Commission.

Recall Summary

Name of product: Polaris RZR recreational off-highway vehicles (ROVs)

Hazard: The recalled ROVs can catch fire while consumers are driving, posing fire and burn hazards to drivers and passengers.

Consumer Contact: Polaris at 800-POLARIS or 800-765-2747 from 8 a.m. to 9 p.m. CT Monday through Friday and 9 a.m. to 5 p.m. CT Saturday and Sunday or online at www.polaris.com and click on “Off-Road Safety Recalls” on the main page of the Polaris website.

Recall Details

Description: The U.S. Consumer Product Safety Commission (CPSC) in cooperation with Polaris Industries Inc., of Medina, Minn., is announcing a recall for about 133,000 Polaris Model Year 2013-2016 RZR 900 and RZR 1000 recreational off-highway vehicles (ROVs).

CPSC and Polaris warn consumers to stop using these recreational vehicles immediately and contact their Polaris dealer for a free repair. Polaris has agreed to voluntarily suspend sale of all recalled vehicles until they are repaired.

Polaris has received more than 160 reports of fires with the recalled RZR ROVs, resulting in one death of a 15 year old passenger from a rollover that resulted in a fire and 19 reports of injuries, including first, second and third degree burns.

Visit www.polaris.com to determine if your RZR ROVs VIN number is included in this recall.

2013/2014 RZR XP 900
3NSJT9EAXEF364144 – 3NSJT9EA4EF385345
4XAJT87A0DP456738 – 4XAJT87A8EF366714

2014/2015/2016 RZR XP 1000 *additional VIN numbers included. Visit Polaris.com.
3NSVDE992FF361215 – 3NSVDE998GF784060
4XAST1EA0EB165962 – 4XAVFE992GB344924

2015/2016 RZR 900 *additional VIN numbers included. Visit Polaris.com.
3NSVAE871FF366883 – 3NSVAE874GH861374
4XAVAA878FB926614 – 4XAVAE873GB673176

2015/2016 RZR S 900 *additional VIN numbers included. Visit Polaris.com.
3NSVBE870FF361395 – 3NSVBA876GH860331
4XAVBE879FP340592 – 4XAVBE876GB673749

2016 RZR S 1000 *additional VIN numbers included. Visit Polaris.com
3NSVBE994GH102740 – 3NSVBE99XGH108171
4XAVBE995GP340655 – 4XAVBE997GB673744

The VIN is normally located on the driver’s side rear frame rail, above the PVT cover. Check your Owner’s Manual if you have any difficulty locating the VIN. VINs are not sequential and not all VINs in the ranges above are included in this recall. To determine if a specific ROV is included in this recall visit www.Polaris.com and click on “Off-Road Safety Recalls” under the “Rider Community” heading on the main page of the Polaris website.

The ROVs were sold at Polaris dealers nationwide from July 2012 through April 2016 for between $16,000 and $26,000. The ROVs were manufactured in the United States and Mexico and imported and distributed by Polaris.

Due to the serious risk of injury, owners and riders should stop using these recalled vehicles immediately. Repairs will start April 22, 2016. To schedule a free repair, consumers should call their local Polaris dealer. Contact Polaris at 800-POLARIS or 800-765-2747 from 8 a.m. to 9 p.m. CT Monday through Friday and 9 a.m. to 5 p.m. CT Saturday and Sunday or online at www.polaris.com and click on “Off-Road Safety Recalls” on the main page of the Polaris website.

In a company press release Polaris CEO Scott W. Wine stated,

“One of our foremost guiding principles is Safety and Ethics Always…We know that the foundation of a good ride is a safe ride, and we have been proactive, aggressive and thorough in putting forth a plan to get our vehicles repaired and give us – and our customers – confidence in the safety of our RZR vehicles. We are working day and night to inform our customers and dealers and to obtain the parts needed for the repairs we identified in our comprehensive analysis. We apologize for the inconvenience to our customers as we work to ensure all the systemic thermal risks we identified are eliminated from our vehicles.”

Polaris is instructing riders not to carry fuel or other flammable liquids in their vehicles.

Learn more: CPSC.gov

Comment: I believe this is the largest recall by far of any side-by-side vehicle. The most recent very large side-by-side recall was from Kawasaki last year that involved about 20,000 vehicles. With 133,000 vehicles involved, the cost of repairing the vehicles could be substantial. Although Polaris has more than enough financial resources to absorb the costs, they are likely concerned to the hit their brand image may take. Not only are they the market leader but the company emphasizes their engineering excellence and innovation.

Can-Am Launches 6-Passenger Defender Max Models

Posted on April 14, 2016 by Marc Cesare

The new 2017 Defender MAX DPS HD8 from Can-Am in Mossy Oak Break-up Camo.

The new 2017 Defender MAX XT HD10 from Can-Am in Intense Red.

Can-Am has expanded their line of Defender utility-recreational side-by-side vehicles with the addition of four 2017 Can-Am Defender Max models. The six passenger Defender Max model is available with either a 72-hp HD10 or 50 hp HD8 Rotax V-twin engine and as an XT version with factory installed accessories. Key standard features for all Defender MAX models include:

PRO-TORQ transmission with Quick-Response System
Three driving modes and a four-mode traction system with Visco-Lok QE front differential
1,750 lb. payload capacity
2,000 lb. towing capacity
1,000 lb. dumpable cargo bed
Cargo bed tie-down points and recesses for five gallon buckets
Removable toolbox
Dynamic Power Steering (DPS)
10″ of front and rear suspension travel
10″ of ground clearance
Integrated front steel bumper
Central skid plate
2″ hitch receiver
Adjustable tilt steering

The four models introduced by Can-Am include the Defender MAX DPS HD8, Defender MAX DPS HD10, Defender MAX XT HD8 and Defender MAX XT HD10. The XT versions add the following:

14″ rather than 12″ aluminum wheels
27″ Maxxis Bighorn 2.0 tires instead of 26″ Maxxis M923/924 tires
4,500-lb. winch with roller fairlead
Full skid plate
Full hard roof
Adjustable driver seat
XT seat skin

The MSRPs for the new models are as follows:

Defender MAX DPS HD8 – $14,399
Defender MAX DPS HD10 – $16,299

These models are available in Green, Yellow or for $800 more Mossy Oak Break-up Country Camo.

Defender MAX XT HD8 – $17,199
Defender MAX XT HD10 – $19,099

The XT models are available in Pure Magnesium Metallic, Intense Red or for $100 more Mossy Oak Break-up Country Camo. BRP is targeting “global tradesman, hunters and farmers” with these new models. Learn more: Can-am.brp.com

Yamaha Recalls YXZ1000R Side-by-Sides

Posted on April 14, 2016 by Marc Cesare

The 2016 Yamaha YXZ1000R in red and white is being recalled as well as the following 2016 model year versions.

The YXZ1000R in orange.

The special edition YXZ1000R-SE in yellow.

The 2016 Yamaha YXZ1000R in blue and white being recalled.

The YXZ1000R in blue and white being recalled.

Yamaha is recalling approximately 7,000 2016 YXZ 1000R and 1000R SE side-by-side utility vehicles due to the potential of water freezing in the throttle cable and posing a crash hazard. No injuries or incidents have been reported related to the potential hazard. The following is the recall information from the Consumer Product Safety Commission.

Hazard: Water can get into the throttle cable and if it freezes during cold weather, the ice can prevent the throttle from returning to idle. This can cause the rider to lose control, posing crash and injury hazards.

Units: About 7,000

Description: This recall involves model year 2016 YXZ1000R and YXZ1000R SE Side-by-Side utility vehicles sold in four colors: orange and black, blue and white, silver and red, and yellow and white. The model name (YXZ…) and “1000” is displayed in a graphic on both the left and right side of the vehicle. The vehicle identification number (VIN) is stamped on the frame near the driver’s side rear wheel. The letter G in the 10th position of the VIN number indicates that the unit was made in the 2016 model year.

Incidents/Injuries: None reported

Remedy: Consumers should immediately stop using the recalled utility vehicles and contact their local Yamaha dealer to schedule a free repair. Yamaha is contacting all registered owners directly.

Sold at: Yamaha side-by-side dealers nationwide from September 2015 to February 2016 for between $19,800 and $21,600.

Distributor(s): Yamaha Motor Corporation USA, of Cypress, Calif.

Manufactured in: USA

Learn more: CPSC.gov

Comment: This recall is relative large in size but more importantly for Yamaha it involves their newest entry into the high-end recreational segment. After their problems with the Rhino, Yamaha had not been active in that market segment for a number of years before the introduction of the 2016 YXZ1000. While in the long run the recall should not be detrimental to their efforts, they would have preferred a recall free re-entry into the recreational side-by-side market.

Cub Cadet Adds Challenger 750 Crew UTV

Posted on March 29, 2016 by Marc Cesare

Cub Cadet expands their Challenger UTV line with the 750 Crew, which seats four.

Cub Cadet has introduced a crew version to their Challenger utility vehicle product line with the new Challenger 750 Crew. The model seats four and features a 735cc, 4-stroke EFI engine, on-demand 4WD, CVT transmission and power steering. Outfitted with 26″ offroad Carlisle tires with aluminum alloy wheels, the Challenger 750 Crew offers 11″ of ground clearance, a 350 lb. cargo box, 1,200 lbs of towing capacity and a front mounted 3,500 lb. winch standard. As with the rest of the Challenger series, which is targeting the value segment, the 750 Crew includes additional standard features including a roof, a quick release two-piece windshield, bumper guard, bucket seats, headrests, mirrors, turn signals and a digital dashboard. The Challenger 750 Crew is available in Red, Yellow, Blue or Camo and has an MSRP of $10,999. Learn More: Cubcadet.com

Comment: The new addition shows the ongoing commitment of Cub Cadet to their utility vehicle offerings. The utility vehicle market has become so competitive in both the work and recreation segments that it requires a continuing investment in new product development and new models. A crew version in a product line is almost a necessity in order to maintain a solid presence in the market. The amount of resources needed to maintain a sufficient level of product development and new product introductions can be substantial for smaller volume manufacturers.

KYMCO Recalls UTVs: Throttle Problem

Posted on March 10, 2016 by Marc Cesare

The KYMCO 450i is one of the models being recalled.

KYMCO 450i Camoflauge

KYMCO 450i LE

KYMCO 450i Turf is also available in red.

KYMCO is recalling approximately 1,700 utility vehicles from model years 2015 and 2016 including the UXV 450i, UXV 450i LE and UXV 450i Turf. The throttle on the vehicles can fail to return to idle and cause the rider to lose control. The company has reported seven instances of the throttle failing, but no injuries. The related information from the Consumer Product Safety Commission follows.

Recall Details

Units: About 1,700

Description: This recall involves all model years 2015 and 2016 UXV 450i, UXV 450i LE and UXV 450i Turf models. Recalled utility vehicles come in the colors blue, camouflage, matte black, gold, green, red, blue and black. The model year 2015 recalled vehicles are those units with the last six numbers of the vehicle identification numbers (VIN) between 100101 and 190370. The model year 2016 recalled vehicles are those units with the last six numbers of the vehicle identification numbers (VIN) between 190371 and 260240. The VIN can be found on the frame behind the right front wheel. UXV is printed on each side of the rear cargo box and on the hood. KYMCO is printed on the side panels.

Incidents/Injuries: The firm has received seven reports of the throttle failing. No injuries have been reported.

Remedy: Consumers should immediately stop using the recalled utility vehicles and contact an authorized KYMCO dealer for a free inspection and free repair. KYMCO is contacting consumers directly.

Sold at: Authorized KYMCO dealers nationwide from June 2014 through November 2015 for between $8,000 and $8,700.

Distributor(s): KYMCO USA, of Spartanburg, S.C.

Manufactured in: Taiwan

Learn more: CPSC.gov

Comment: This is not a large recall but pretty significant for KYMCO which is one of the smaller manufacturers. They have been one of the more successful import companies selling vehicles at the $8,000 to $10,000 value price range.

What’s Cooking on the STOV: Mining Vehicles

Posted on March 7, 2016 by Marc Cesare

Highlighting some of the many applications for Small, Task-Oriented Vehicles

A Gravely utility vehicle ready for work at a local mining operation.

A Gravely utility vehicle ready to go to work at a local mining operation.

Fifth Gear Powersports of Elko, NV recently won several Reader Choice Awards sponsored by their local newspaper, the Elko Daily Free Press. No doubt their dedication to the local off-road bike and UTV scene is a big reason for their popularity, but they also cater to the local mining industry. They started by selling LED lights used for off-road night riding to the local mining operations. They also sell a variety of UTV vehicles from brands such as Kawasaki, Gravely and Polaris for use in underground mines. The utility vehicles must be configured to meet Mine Safety and Health Administration standards. Fifth Gear services the vehicles and has a washing bay at their facility for cleaning utility vehicles that come directly from a mine. Learn more: Elkodaily.com

Buyer Beware: UTV Odometer Rollbacks

Posted on February 21, 2016 by Marc Cesare

A typical odometer for a UTV.

A recent story from KATV in Arkansas illustrates a potential issue when purchasing a used utility vehicle or side-by-side, fraudulent odometer rollbacks. The story follows the trail of a UTV that changed hands three times, losing a significant amount of mileage in the process. A private owner first sold the 2014 Yamaha Viking to a dealer for $9,250, but not before taking a picture of the odometer displaying 1,722 miles. The UTV was then sold as part of a group of vehicles to Gibson Auto Sales for $12,500, which turned around and sold the UTV to another private buyer fro $17,900. However, when the final private buyer bought the vehicle the odometer only showed 44 miles. Since UTVs are not licensed for road use they do not fall under the same laws as cars and trucks in the state. Therefore, when the title changes hands the mileage does not have to be recorded. In this case, no one has taken responsibility for changing the mileage, but the buyer was able to get their money refunded. The process of rolling back the mileage on a UTV can be accomplished relatively easily by purchasing a new speedometer and switching it out. They only cost one to two hundred dollars online. Learn more: KATV.com

Comment: With UTVs frequently selling for over $10,000 and even $20,000 the issue of odometer rollbacks is likely to become more prevalent not less. The majority of used UTV sales are also between private buyers, which makes it more difficult to determine if you are dealing with a reputable seller, and recoup your money if something fraudulent is perpetrated. If you are spending thousands of dollar on a used UTV, particularly one with low mileage, it is best to purchase the vehicle from someone you know, thoroughly inspect the vehicle for signs of significant use, or have a mechanic do it for you.

Arctic Cat FY 2016 Q3 Results

Posted on February 10, 2016 by Marc Cesare

The new 2017 Prowler 500 from Arctic Cat begins shipping this month.

The new Arctic Cat HDX 700 Crew XT for model year 2017 also ships this month.

Arctic Cat recently reported their financial results for the fiscal year 2016 third quarter. For the quarter net sales declined 14.3%, in part driven by currency headwinds and the timing of vehicle shipments compared to the prior year’s third quarter.

The following are highlights of the earnings call as it relates to the UTV/side-by-side market.

Sales of ATVs and ROV side-by-sides decreased 28.5% to $60 million from $83.9 million in the year ago quarter, in part driven by shipment timing
Softening of the overall ATV/ROV(side-by-side) retail market is a contributing factor in management’s lowering of fiscal year 2016 guidance
Management continues to emphasize improving their dealer network with additional training, marketing programs and performance metrics
Arctic Cat is planning to add 75 dealers in the next 12 months after adding 10 in the last three months
This month the company begins shipment of their new 2017 HDX 700 Crew and Prowler 500
Compared to the prior year third quarter, total ATV, ROV unit retail sales in the fiscal 2016 third quarter rose mid-single-digits versus an industry that was flat to slightly down
Management has decided to create a world-class research and development center in St. Cloud, and one focus will be to improve their engine technology
Management admitted that Wildcat vehicle sales have been hurt by their comparatively lower horsepower but that the 2017 models will “correct” that problem

Learn more: Seekingalpha.com (Earnings call transcript)

Polaris Q4 2015 Results Point To Slowing UTV Market

Posted on February 10, 2016 by Marc Cesare

The base model General 1000 EPS is Indy Red with an MSRP of $15,999.

Despite a good start for the new General crossover utility vehicle, Polaris had a tough fourth quarter in 2015 as the UTV/side-by-side market showed weakness.

Polaris reported their worst year-over-year quarterly performance since 2009 with their recent Q4 2015 results. Fourth quarter sales were down 13% to $1.1 billion with net income of $110.7 million, down 18% as all businesses except Indian motorcycles and Slingshot fell short of expectations. Management expects a slowdown in the UTV/side-by-side market faces tough macroeconomic conditions in North American and abroad, as well as currency headwinds. The following are highlights of the earnings call as they relate to the UTV/side-by-side market.

Despite solid demand for the new GENERAL and improving interest in the RZR Turbo, Polaris lost side by side market share in the fourth quarter.
To keep dealer inventory low the company cut shipments of higher margin RZRs and Rangers.
Off-road vehicle dealer inventory including ATVs was down year-over-year for the first time in six years
Side-by-side dealer inventory was up slightly for the year
Management reported a “more cautious” consumer in the ORV channel
Polaris side-by-side revenue for 2015 grew “modestly”
4th quarter side-by-side retail sales in North America declined mid-single digits as the industry grew slightly
The new GENERAL vehicles began shipping in December, and initial consumer and dealer response was positive
ORV sales in oil producing states declined 10% while other areas of the market increased mid-single digits
For the full year 2015, Polaris again grew side-by-side market share.
Side-by-side retail sales increased mid-single digits in a side-by-side industry that grew slightly slower
Camp RZR in Glamis, California had an all-time record attendance, over 17,000 strong, which was up 45%
Q4 North American work and transportation revenue decreased low 20s percent as difficult comparables included the Ariens partners launch
GEM sales declined due to the transition to a completely redesigned GEM product platform during the quarter
Initial GEM orders are solid and a strong 2016 is expected
Q4 European Work and Transportation revenue declined low single-digits percent due primarily to currency weakness and some softness in Goupil and Mega
Aixam sales grew high single digits and the European quadricycle industry grew in both fourth quarter and for full year 2015, up low single-digits with Aixam retail up slightly more increasing their leading market share
Vehicles sales in Q4 and 2015 to Department of Defense and GSA related accounts were hurt by stop gap funding measures, but 2016 backlog is “healthy”
The European ORV industry grew mid-single digits in the fourth quarter and for the year.
Polaris gained share in the fourth quarter, as retail was up mid-teens percent and for the full year retail increased mid-single digits.
Multix, the three-in-one personal transportation vehicle from the Polaris-Eicher joint venture in India is retailing vehicles.
Multix customers are satisfied although currently the retail ramp remains well below management expectations, but they expect to accelerate retail in 2016 with key product improvements and further distribution expansion.
Huntsville plant will start production in Q2 and will initially produce RANGER side-by-sides
Huntsville incorporates the company’s most advanced Lean flow and state of the art manufacturing technologies and improves throughput times by approximately 80% compared to existing facilities
Management expects continued macroeconomic headwinds with ongoing currency issues overseas, a slight slowdown in global economies and a low growth economy in North America
Total company sales are expected to be in the range of down 2% to up 3%
ORV market share is expected to be maintained while gains are expected in global adjacent markets
ORV/snowmobiles revenue is anticipated to be flat to down mid-single digits and global adjacent markets up mid-single digits
Management continues to forecast strong competition in the side-by-side market
Q1 for 2016 side-by-side revenues is expected to be down because of Canadian currency issues, a weaker retail environment and tough prior comparables

Learn more: Seekingalpha.com (Earnings call transcript)

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Information on the small, task-oriented vehicle market

Category Archives: side-by-side

Polaris Reports Q1 2016 Earnings

Polaris Recalls 133,000 RZR 900 and 1000 Vehicles

Can-Am Launches 6-Passenger Defender Max Models

Yamaha Recalls YXZ1000R Side-by-Sides

Cub Cadet Adds Challenger 750 Crew UTV

KYMCO Recalls UTVs: Throttle Problem

What’s Cooking on the STOV: Mining Vehicles

Buyer Beware: UTV Odometer Rollbacks

Arctic Cat FY 2016 Q3 Results