Connect with us
Close Sidebar Panel Open Sidebar Panel

OEM

Polaris Announces Q4, Full Year 2020 Results

Polaris Inc. released fourth quarter 2020 results with reported sales of $2,156 million, up 24% from reported sales of $1,736 million for the fourth quarter of 2019. The company reported fourth quarter 2020 net income of $199 million, or $3.15 per diluted share, compared with net income of $99 million, or $1.58 per diluted share, for the 2019 fourth quarter. Adjusted net income for the quarter ended Dec. 31, 2020 was $211 million, or $3.34 per diluted share compared to $115 million, or $1.83 per diluted share in the 2019 fourth quarter.

Advertisement
Click Here to Read More
Advertisement

Retail demand and industry tailwinds remained strong during the quarter benefiting company performance as both new and existing customers continued taking advantage of off-road vehicles, snowmobiles, motorcycles and boats to enjoy the outdoors while maintaining social distancing etiquette.

Gross profit increased 30% to $550 million for the fourth quarter of 2020 from $423 million in the fourth quarter of 2019. Reported gross profit margin was 25.5% of sales for the fourth quarter of 2020, up 112 basis points compared to 24.4% of sales for the fourth quarter of 2019. The improvement in gross profits was primarily driven by positive product mix and lower promotional costs incurred during the quarter, offset somewhat by costs related to supplier constraints. Adjusted gross profit for the fourth quarter 2020 was $552 million, or 25.6% of adjusted sales compared to the fourth quarter of 2019 adjusted gross profit of $428 million, or 24.7% of sales. Adjusted gross profit for the fourth quarter of 2020 and 2019 excludes the negative impact of $2 million and $5 million of restructuring and realignment costs, respectively.

Operating expenses decreased 1% for the fourth quarter of 2020 to $304 million from $308 million in the same period in 2019. Operating expenses were lower due to decreased compensation expense related to the CEO departure, in addition to lower non-essential expenses driven by the Company’s ongoing cautionary approach to spending given the pandemic-generated economic uncertainty.

Advertisement

Income from financial services was $17 million for the fourth quarter of 2020, down 17% compared with $21 million for the fourth quarter of 2019. The decrease was primarily the result of a decrease in wholesale financing income during the quarter due to lower dealer inventory levels.

“The Polaris team once again demonstrated its strength and agility to deliver a strong finish to an exceptionally unusual year. While 2020 brought many unforeseen challenges, we emerged from the abrupt shutdown of the global economy early in the year to leverage the surge in demand across the powersports industry and outdoor recreation, growing full year adjusted sales and earnings 4% and 22%, respectively. Our highly innovative product line-up of ORVs, snowmobiles and boats brought in new customers and powersports enthusiasts to Polaris. Over the year, we introduced over 120 new products across our portfolio and over 900 new accessories in our PG&A business and aftermarket segment, combined. While supply chain challenges remain front and center for Polaris and most of the industry as we enter 2021, the operational track record of our team gives me great confidence in our ability to navigate those constraints, rebuild dealer inventories, and continue to bring to market the highest quality, most innovative products and services in the powersports industry,” said Mike Speetzen, interim chief executive officer of Polaris Inc.

Advertisement

Off-Road Vehicles and Snowmobiles

Off-road vehicles and snowmobiles segment sales, including PG&A, totaled $1,468 million for the fourth quarter of 2020, up 29% compared to $1,140 million for the fourth quarter of 2019 driven by broad based strength across ATV and side-by-side sales. PG&A sales for ORV and snowmobiles combined increased 35% in the fourth quarter of 2020 compared to the fourth quarter last year. Gross profit increased 29% to $387 million in the fourth quarter of 2020, compared to $299 million in the fourth quarter of 2019. Gross profit percentage increased 11 basis points during the 2020 fourth quarter compared to the prior year due to strong retail demand, positive product mix and lower promotional and floor-plan financing costs offset somewhat, by higher logistical costs and plant inefficiencies from supply chain constraints.

ORV wholegoodsales for the fourth quarter of 2020 increased 33%. Polaris North American ORV retail sales increased low-thirties percent for the quarter with side-by-side vehicles up high-thirties percent and ATV vehicles up high-teens percent. The North American ORV industry was up high-twenties percent compared to the fourth quarter last year.

Snowmobile wholegood sales in the fourth quarter of 2020 were $183 million, up 4% compared to $176 million in the fourth quarter last year. Polaris snowmobile retail sales were up low-twenties percent during the fourth quarter of 2020 compared to the prior year while North American industry retail was up mid-teens percent for the fourth quarter compared to the prior year.

Advertisement

Motorcycles

Motorcycles segment sales, including PG&A, totaled $147 million, up 23% compared to the fourth quarter of 2019, driven primarily from increased sales of Slingshot and PG&A. Gross profit for the fourth quarter of 2020 was $1 million compared to a $5 million loss in the fourth quarter of 2019. The increase in gross profit margin was driven by improved quality driving lower warranty costs, along with a decrease in promotional costs offset somewhat, by negative product mix as more mid-sized vehicles were sold during the quarter and increased costs from supply chain constraints.

North American consumer retail sales for Indian Motorcycle increased low-thirties percent during the fourth quarter of 2020 in a weak mid to heavy-weight 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, increased high-thirties percent during the fourth quarter of 2020, while the North American motorcycle industry retail sales for mid- to heavy-weight motorcycles including three-wheel vehicles, was down low-single digits percent in the fourth quarter of 2020.

Global Adjacent Markets segment sales, including PG&A, increased 18% to $142 million in the 2020 fourth quarter compared to $120 million in the 2019 fourth quarter driven by increases in demand in North America and EMEA. Gross profit increased 18% to $41 million or 29.0% of sales in the fourth quarter of 2020, compared to $35 million or 28.9% of sales in the fourth quarter of 2019. Gross profit percentage increased during the quarter primarily due to lower warranty and promotional costs.

Advertisement

Aftermarket

Aftermarket segment sales of $238 million in the 2020 fourth quarter increased 8% compared to $221 million in the 2019 fourth quarter. Transamerican Auto Parts (TAP) sales of $186 million in the fourth quarter of 2020 increased 1% compared to $185 million in the fourth quarter of 2019. The Company’s other aftermarket brands sales were up 45% compared to the fourth quarter of 2019. Gross profit increased 33% to $65 million or 27.4% of sales in the fourth quarter of 2020, compared to $49 million or 22.3% of sales in the fourth quarter of 2019.

Boats segment sales increased 20% to $162 million in the 2020 fourth quarter compared to $135 million in the 2019 fourth quarter, driven by strength from all three brands, Bennington, Godfrey and Hurricane. Gross profit increased 36% to $35 million or 21.5% of sales in the fourth quarter of 2020, compared to $26 million or 19.0% of sales in the fourth quarter of 2019 primarily due to increased volume offset somewhat, by costs related to supply chain driven plant inefficiencies.

Supplemental Data

Parts, Garments, and Accessories sales increased 31% for the 2020 fourth quarter with all categories and business segments growing sales during the quarter.

International sales to customers outside of North America, including PG&A, totaled $266 million for the fourth quarter of 2020, up 24% from the same period in 2019.

Advertisement

2021 Business Outlook

The company announced its sales and adjusted earnings guidance for the full year 2021. Sales are expected to increase to the range of $7,950 million to $8,150 million, an increase of 13% to 16% over 2020 adjusted sales of $7,025 million and adjusted net income is expected to be in the range of $8.45 to $8.75 per diluted share for the full year 2021 compared to adjusted net income of $7.74 per diluted share for 2020. The full year 2021 earnings guidance includes an increase in tariff costs of approximately $40 million for the full year 2021 as exemptions and refunds received in 2020 are not contemplated to continue into 2021.

Link: Polaris

Advertisement
Click to comment
Connect
Motorcycle & Powersports News