Polaris Inc. released third quarter 2021 results with reported sales of $1,960 million, up $5 million from reported sales of $1,955 million for the third quarter of 2020. The company reported third quarter 2021 net income of $115 million, or $1.84 per diluted share, compared with net income of $167 million, or $2.66 per diluted share, for the 2020 third quarter. Adjusted net income for the quarter ended Sept. 30, 2021, was $123 million (or $1.98 per diluted share) compared to $179 million (or $2.85 per diluted share) in the 2020 third quarter.

Gross profit decreased 13% to $466 million for the third quarter of 2021 from $535 million in the third quarter of 2020. Reported gross profit margin was 23.8% of sales for the third quarter of 2021, down 359 basis points compared to 27.3% of sales for the third quarter of 2020. The decrease in gross profit was driven primarily by higher input costs, including logistics, components and commodity prices as well as plant inefficiencies related to supply-chain constraints, partially offset by increased pricing and lower promotional costs. Adjusted gross profit for the third quarter of 2021 was $468 million, or 23.9% of adjusted sales, compared to the third quarter of 2020 adjusted gross profit of $537 million, or 27.5% of sales. Adjusted gross profit for the third quarter of 2021 and 2020 excludes the negative impact of approximately $2 million of restructuring and realignment costs in each period. 

Operating expenses increased 3% for the third quarter of 2021 to $322 million from $313 million in the same period in 2020. Operating expenses increased slightly primarily due to an increase in research and development.

Income from financial services was $11 million for the third quarter of 2021, down 38% compared with $18 million for the third quarter of 2020. The decrease was due to lower retail financing income resulting from lower retail sales and lower penetration rates at the company’s retail financing providers and a decrease in wholesale financing income due to lower dealer inventory levels.

Off-road vehicles (ORV) and snowmobiles segment sales — including parts, garments and accessories (PG&A) — totaled $1,208 million for the third quarter of 2021, down 6% compared to $1,289 million for the third quarter of 2020, driven by lower volumes due to supply chain constraints and related component shortages. PG&A sales for ORV and snowmobiles combined increased 6% in the third quarter of 2021 compared to the third quarter last year. Gross profit decreased 31% to $260 million in the third quarter of 2021, compared to $378 million in the third quarter of 2020. Gross profit percentage decreased 777 basis points during the 2021 third quarter compared to the prior year, due to higher input costs related to supply chain constraints more than offsetting increased pricing and lower promotional costs.

ORV wholegood sales for the third quarter of 2021 decreased 6%. Polaris North American ORV retail sales decreased in mid-twenties percent for the quarter with side-by-side vehicles down mid-twenties percent and ATV vehicles down about 20%. The North American ORV industry was down high-twenties percent compared to the third quarter last year.

Snowmobile wholegood sales in the third quarter of 2021 were $28 million compared to $70 million in the third quarter last year. Snowmobile sales were impacted by the timing of shipments for the company’s pre-season snowmobile orders year-over-year and supply-chain disruptions.

Motorcycles segment sales, including PG&A, totaled $194 million, up 16% compared to the third quarter of 2020, driven by increased sales of Slingshot, Indian Motorcycles and related PG&A. Gross profit for the third quarter of 2021 was $18 million, or 9.2% of sales, compared to $16 million, or 9.3% of sales, in the third quarter of 2020. The slight decrease in gross profit margin was driven by increased input costs from supply chain constraints partially offset by favorable product mix, increased pricing and lower promotions costs. 

North American consumer retail sales for Indian Motorcycles decreased 12% during the third quarter of 2021 in a mid-to-heavyweight two-wheel motorcycle industry that was down mid-single digits percent. North American consumer retail sales for Polaris’ motorcycle segment, including both Indian Motorcycle and Slingshot, decreased mid-teens percent during the third quarter of 2021. North American consumer retail sales for the motorcycle industry — including both two-wheel and three-wheel — decreased mid-single digits percent during the third quarter of 2021. Indian and Slingshot market share losses were driven by a lack of product availability during the quarter driven by supply chain challenges. 

Global adjacent markets segment sales, including PG&A, increased 37% to $147 million in the 2021 third quarter compared to $107 million in the 2020 third quarter driven by increases in demand in North America and Europe, Middle East and Africa (EMEA). Gross profit increased 30% to $41 million or 27.9% of sales in the third quarter of 2021, compared to $32 million, or 29.7% of sales in the third quarter of 2020. Gross profit percentage decreased during the quarter primarily due to higher input costs related to supply chain constraints, offset somewhat by lower promotional and warranty costs.

Aftermarket segment sales of $227 million in the 2021 third quarter decreased 4% compared to $237 million in the 2020 third quarter. Transamerican Auto Parts (TAP) sales of $182 million in the third quarter of 2021 decreased 6% compared to $194 million in the third quarter of 2020. The company’s other aftermarket brands sales were up 4% compared to the third quarter of 2020. Gross profit decreased 6% to $60 million, or 26.5% of sales in the third quarter of 2021, compared to $64 million, or 26.9% of sales in the third quarter of 2020. Gross profit percentage declined during the quarter due to lower sales volumes and increased input costs, partially offset by increased pricing.

Boats segment sales increased 18% to $184 million in the 2021 third quarter compared to $155 million in the 2020 third quarter, driven by sales growth in the Bennington and Godfrey brands. Gross profit increased 24% to $41 million, or 22.4% of sales in the third quarter of 2021, compared to $33 million, or 21.5% of sales in the third quarter of 2020 due to increased pricing and positive product mix partially offset by higher input costs related to supply chain constraints.