Friday, January 28, 2011... Polaris Reports Record 2010 Fourth Quarter and Full Year Results

MINNEAPOLIS--Polaris Industries Inc. (NYSE:PII) today reported record net income of $1.55 per diluted share for the fourth quarter of 2010, up 18 percent over the 2009 fourth quarter. Net income for the fourth quarter 2010 was a record $54.5 million, an increase of 24 percent over the same period in 2009. Record sales of $618.4 million for the fourth quarter 2010 increased 31 percent over 2009 fourth quarter sales of $471.8 million.


Full Year Results
For the full year ended December 31, 2010, Polaris reported record net income of $147.1 million, or a record $4.28 per diluted share, compared to $101.0 million, or $3.05 per diluted share for the year ended December 31, 2009. This represents a 40 percent increase on a per diluted share basis and a 46 percent increase in net income. Sales for the full year 2010 totaled a record $1,991.1 million, an increase of 27 percent compared to sales of $1,565.9 million for the full year 2009.
“2010 was an exceptional year for Polaris. Not only did we deliver record sales and earnings, but the Polaris team made significant progress toward our long-term strategy and positioned the business for profitable growth in the future. We gained market share in all of our businesses and grew sales in every region of the world. Our persistent focus on margins paid dividends, as gross profit margins increased 150 basis points and net margins expanded by 90 basis points to 7.4 percent of sales. We also expanded our leadership position in the side-by-side industry, and grew sales and market share in our Victory motorcycles and snowmobile businesses,” stated Scott Wine, Chief Executive Officer. “In addition to our record financial performance, we made several strategic investments in the business during 2010 that position us for future growth, including investments in China, Brazil and India, and a small powertrain acquisition in Europe. Lastly, our manufacturing realignment project, announced in mid-2010, is on track to begin production in our new Monterrey facility by mid-2011.”
“Our efforts throughout 2010 have further positioned the Company for continued growth and profitability in 2011 and beyond. Importantly, dealer inventories for ORV and Victory continued to decline in 2010 and are at appropriate levels as we enter 2011. Additionally, we expanded the retail sales program called Max Velocity Program, or MVP, into the remaining 50 percent of our ORV dealers in North America during the second half of 2010. We expect MVP to continue to drive retail sales velocity and market share gains in 2011,” Wine continued.
“Ending 2010 with $394 million in cash and only $200 million in total debt, we have both the financial strength and flexibility to continue to make organic and acquisitive investments to support our long-term growth initiatives. We expect the investments made over the past two years, supported by continued product innovation, ever-increasing speed to market, productive lean manufacturing initiatives, and low-cost purchasing capabilities to continue to deliver net margin expansion in 2011, resulting in another record year of sales and earnings for the Company.”


Off-road Vehicles (“ORV’) sales, which include sales of both ATVs (all-terrain vehicles) and RANGER™ side-by-side vehicles, increased 40 percent during the fourth quarter 2010 from the fourth quarter 2009. This increase reflects continued market share gains for both ATVs and side-by-side vehicles driven by industry leading product offerings and the success of the MVP retail go-to-market process. All North American ORV dealers are now utilizing the MVP order process as of the 2010 third quarter. North American dealer inventories of ATVs continued to decline, decreasing 33 percent from the 2009 fourth quarter and sequentially decreasing eight percent from the third quarter of 2010. Polaris’ North American ORV unit retail sales to consumers increased approximately 11 percent for the 2010 fourth quarter compared to a tougher 2009 fourth quarter comparable, with side-by-side vehicle retail sales increasing over 20 percent quarter over quarter and ATV retail sales about flat with the prior year. The Company’s newer products have been well received by consumers, including the new mid-sized RANGER side-by-side with increased power, a 4-person mid-sized RANGER Crew and the first RANGER with a diesel engine. The most recent example of the Company’s continued aggressive new product development is the introduction in January 2011 of the all-new high performance RANGER RZR XP 900 to Polaris’ recreational family of vehicles. The unique features of the RZR XP 900 include a new 88 horsepower electronic fuel injected twin cylinder engine and a new 3-link trailing arm independent rear suspension with 14-inches of travel. In addition, shipments to Bobcat of its differentiated utility vehicle continued to gain market share in the 2010 fourth quarter. Given the growth in the Company’s ORV business worldwide, Polaris has widened its market share leadership in off-road vehicles in both North America and Europe.

I bet the other companies will feel that!!!!! Hum, I wonder what market I would be focusing on??????

Big-R wrote:

I bet the other companies will feel that!!!!! Hum, I wonder what market I would be focusing on??????

Yes....the ORV market is good right now....but the hard part for these MFG's is to for see the down trend......as a buddy of mine always reminds me..." The grave train always comes to the end of the tracks".

My thinking is about the same as Big Rs.. Say what you want about polaris, But when we first got our RZR in 09 and went to a local OHV park.. We got stopped a million times people wanting to see it cause you just didn't see to many around here.. We went to the white knuckle event at brimestone and there was probably 5 Rhino's for every one RZR.. Fast forward a couple years and pretty much all we see is RZRs.. Go on a ride and there will be 10 RZRs to one anything else.. I use to have to explain what a RZR was now when I say RZR and start to explain it. They look at me like I'm crazy and just say I know what a RZR is.. Its pretty big change in a short time.. Its amazing they don't have any real competition in sport SxS market..

8ball_99 wrote:

Its amazing they don't have any real competition in sport SxS market..

True That!. Polaris has a 14 year patent (until 2021) on the rear engine design of the "Sport" SidexSide. I believe this puts the competition at a real disadvantage in producing something that will compete with it. That being a long travel lightweight powerful machine with a low center of gravity, while keeping it narrow enough to navigate tight trails. The key to Polaris low center of gravity is the low placement of the driver and passenger in the machine. You cannot accomplish this with a mid engine design. The occupants would cook from the engine heat and the noise would be unbearable if you tried to lower the passengers next to the motor. Any Sport design with a rear engine from another manufacturer would bring an immediate lawsuit. That only leaves the possibility of a front engine machine, which will have it's own challenges in the handling of it.

The other issue for manufacturers is the ability to beat the RZR at it's own game. The main reason people buy RZR's are for the trail performance. Any competitor will have to beat that performance, or it simply wont sell. I think because of this, Polaris will own the Sport SxS market until 2022. Then look out.........

I just can't see how they can patent a rear mount engine in a OHV.. It has been done for years. Rails and buggies have been doing it forever.. Just seems hard to understand.

8ball_99 wrote:

I just can't see how they can patent a rear mount engine in a OHV.. It has been done for years. Rails and buggies have been doing it forever.. Just seems hard to understand.

You can put one in a OHV or Utility UTV. Just not a "Sport Model" SidexSide.

Whats the difference between a sport SxS and a 2 seater buggy with a rear mount engine? To me a RZR looks more like a buggy or rock crawler then a SxS. At least compared to all the other
SxS. Is it just the bed that makes it a SxS?

8ball_99 wrote:

Whats the difference between a sport SxS and a 2 seater buggy with a rear mount engine? To me a RZR looks more like a buggy or rock crawler then a SxS. At least compared to all the other
SxS. Is it just the bed that makes it a SxS?

I am with you on this one!

like ronnie told me, if its got a dump bed on it then its Utility. The whole patten issue makes me wonder that maybe that is why the can am was more UTL based than figured before.

Honestly I think can am was working on their SxS for a while.. A couple of years ago Rhino had a lot more following then it does now.. When they started on the commander a sporty Rhino was a good idea.. Now all people really need is a place for a cooler, couple tools and maybe some spare gas.. IF the bed makes it a SxS leave it off.. Stick a dern basket back there.. or just a rack for a cooler and tool box...