Polaris Industries Inc. (NYSE: PII) today reported record third quarter net income of $67.6 million, or $0.95 per diluted share, for the quarter ended September 30, 2011, up 43 percent and 38 percent, respectively, from the prior year's third quarter net income of $47.2 million, or $0.69 per diluted share. Sales for the third quarter 2011 totaled a record $729.9 million, an increase of 26 percent from last year's third quarter sales of $580.1 million.
Scott Wine, Polaris' Chief Executive Officer, stated that "Despite challenging economic conditions, we are pleased to report another record quarter of sales, net income and earnings per share. I am exceptionally proud of how the Polaris team continued to drive growth and productivity in the third quarter. Each of our businesses experienced strong sales growth in the period, primarily driven by sustained market share gains. North American consumer retail demand for Polaris products remains vital, increasing 16 percent. We also once again improved our profitability, with healthy gross profit margin and net income margin increases when compared to last year."
"I am also pleased to report that our Monterrey, Mexico manufacturing facility shipped their 10,000th side-by-side product in the quarter, marking an important milestone while demonstrating the schedule fidelity and focus on quality that is a cornerstone of Polaris operations. Additionally, integration of Global Electric Motorcars (GEM) and Indian Motorcycle Company is progressing according to plan, providing us with exciting new growth platforms."
2011 Business Outlook The Company is increasing its previously issued sales and earnings guidance and now expects full year 2011 earnings in the range of $3.10 to $3.16 per diluted share, an increase of 45 to 48 percent over full year 2010 earnings of $2.14 per diluted share. Full year 2011 sales are now expected to grow in the range of 30 to 32 percent from 2010.
Wine noted, "Given our year-to-date results, the positive momentum exhibited by our businesses, and the strong performance of our 2012 model year products introduced earlier this year, we are raising our full year 2011 sales and earnings expectations. We expect 2011 will be a record year for Polaris, demonstrating our commitment to making growth happen in spite of adverse economic conditions.
"Looking ahead to 2012, we expect the overall economic climate to remain challenging. However, we believe our business is well positioned to offset these headwinds, as we continue to execute our successful long-term strategy, invest in product innovation, and seize additional opportunities to sustain our momentum. While our current success means the sales and earnings comparisons will be much tougher in 2012, at this early stage we expect to have another year of increasing sales, net income and earnings per share."
Third Quarter Performance Summary (in thousands except per share data)
Three Months ended September 30, Nine Months ended September 30,
Product line sales 2011 2010 Change 2011 2010 Change
Off-Road Vehicles $486,243 $389,349 25% $1,356,566 $981,823 38%
Snowmobiles 95,102 77,285 23% 110,865 84,804 31%
On-Road Vehicles 35,655 20,137 77% 111,449 60,984 83%
Parts, Garments, Access. 112,861 93,311 21% 296,100 245,086 21%
Total Sales $729,861 $580,082 +26% $1,874,980 $1,372,697 +37%
Gross profit $206,836 $150,699 +37% $536,275 $358,697 +50%
Gross profit as % of sales 28.3% 26.0% +230 bpts 28.6% 26.1% +250 bpts
Operating expenses $102,873 $87,139 +18% $296,620 $228,759 +30%
Operating expenses as 14.1% 15.0% -90 bpts 15.8% 16.7% -90 bpts
% of sales
Operating Income $110,290 $67,696 +63% $256,794 $142,575 +80%
Operating Income as 15.1% 11.7% +340 bpts 13.7% 10.4% +330 bpts
% of sales
Net Income $67,637 $47,221 +43% $163,676 $92,616 +77%
Net income as % of sales 9.3% 8.1% +120 bpts 8.7% 6.7% +200 bpts
Diluted Net Income $0.95 $0.69 +38% $2.30 $1.36 +69%
per share
Summary of Operations
Off-Road Vehicle ("ORV") sales, comprised of all-terrain vehicles ("ATVs") and RANGER? side-by-side vehicles, increased 25 percent year-over-year, to $486.2 million, during the third quarter 2011. This increase reflects significant North American market share gains for both ATVs and side-by-side vehicles. North American ORV unit retail sales from dealers to consumers for the 2011 third quarter were up low-teens percent year-over-year, with side-by-side vehicle consumer retail sales climbing significantly and ATV consumer retail sales down mid-single digits percent. As a result of consistently strong demand for Polaris products, North American ORV dealer inventories were up modestly compared to the third quarter of 2010, as higher side-by-side vehicle dealer inventory was largely offset by lower ATV dealer inventory. Polaris sales of ORVs outside of North America increased 59 percent compared to the third quarter 2010.
