Polaris Reports Q2 Results
20 July 1998
Polaris Reports Second Quarter ResultsMINNEAPOLIS--July 20, 1998--
Earnings Per Share Up 12 Percent on 10 Percent Increase in Sales
Polaris Industries Inc. today reported a 12 percent increase in net income per diluted share for the second quarter ended June 30, 1998 on a 10 percent increase in sales. Net income per diluted share for the 1998 second quarter totaled $.55 compared to $.49 per diluted share in the 1997 second quarter. Net income for the 1998 second quarter rose nine percent to $14,484,000 from $13,294,000 in the comparable 1997 period while 1998 second quarter sales grew to $274,711,000 compared to $249,888,000 in the 1997 second quarter.
For the six months ended June 30, 1998, sales grew to $484,712,000 from $474,522,000 in the comparable 1997 period. Net income for the first six months of 1998 totaled $22,845,000, or $.87 per diluted share, compared to $25,313,000, or $.93 per diluted share, in the first six months of 1997.
Polaris Chairman and CEO W. Hall Wendel said he was pleased with the growth in second quarter sales and net income and that the company is on track to meet its 1998 financial performance goals. "We remain confident we will achieve growth in sales for the full year and that 1998's net income will exceed 1997's record level," said Wendel.
Wendel attributed the growth in second quarter sales and net income primarily to continued strength in the all-terrain vehicle (ATV) market. "Our ATV retail sales continue to grow at double-digit rates as consumers find new uses for these increasingly versatile products," said Wendel.
Wendel said the new Sportsman 335 model has led sales growth at Polaris recently and noted that the new Polaris Ranger is also being well received in the marketplace. The Polaris Ranger is a six-wheel-drive, fully suspended side-by-side utility and recreational off-road vehicle.
Polaris has also begun shipping its first diesel-powered ATV. "Our diesel ATV extends our reach into markets where diesel power is preferred or required, including the worldwide mining and petroleum industries, where there are substantial opportunities for new sales," said Wendel.
The first Victory V92C motorcycles rolled off the assembly line at the Polaris plant in Spirit Lake, Iowa on the Fourth of July (Independence Day) just over a year after the unveiling of the prototype. Polaris expects to ship between two and three thousand bikes by the end of 1998. Virtually all of the 1998 output has been pre-sold at retail through a network of 200 authorized Victory dealers. The Victory V92C was named "Best Cruiser of 1998" by Cycle World, the leading motorcycle enthusiast magazine. "We expect to expand production, add to the product line and extend distribution to international markets as Victory motorcycles become a key contributor to our growth over the coming years," said Wendel.
Wendel said poor snow conditions and warmer than normal temperatures throughout North America last winter dampened retail sales of snowmobiles. As a result, the company expects snowmobile production for the coming season to decline slightly from the prior year level. "We have worked successfully with our dealers to resolve season-ending inventory issues and now together are looking forward enthusiastically to the new model year. Dealers responded very favorably to our new line of snowmobiles and the enthusiast media are consistently echoing their praise for our new models," said Wendel.
Regarding personal watercraft (PWC), Wendel said the company is on track to have a clean inventory pipeline by the end of the 1998 selling season. "We are poised to take advantage of that with a new PWC product line we will be introducing in August," he added.
As previously announced, Tom Tiller, a veteran GE executive, joined Polaris as president and chief operating officer on July 8th. Tiller succeeds Ken Larson, who is retiring on September 1, 1998.
Polaris continues to repurchase its common shares under a recently expanded authorization from its Board of Directors. In May, the Board approved the cumulative repurchase of up to 5.0 million Polaris Industries Inc. common shares, up from the previously authorized 3.0 million. Through June 30, 1998, the company had cumulatively repurchased approximately 2.4 million shares.
Polaris Industries Inc. designs, engineers, manufactures and markets snowmobiles, all-terrain vehicles, motorcycles and personal watercraft and the Polaris Ranger for recreational and utility use. Polaris is the world's largest snowmobile manufacturer, and one of the largest U.S. manufacturers of all-terrain vehicles and personal watercraft. Polaris Industries Inc. trades on the New York Stock Exchange and Pacific Stock Exchange under the symbol "PII", and the company is included in the S&P SmallCap 600 stock price index.
Except for historical information contained herein, the matters set forth in this news release, including management's expectations regarding 1998 sales and net income, and estimated production volumes of Victory motorcycles are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Potential risks and uncertainties include such factors as product offerings and pricing strategies by competitors; warranty expenses; foreign currency exchange rate fluctuations; environmental and product safety regulatory activity; effects of weather; uninsured product liability claims; and overall economic conditions, including inflation and consumer confidence and spending. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the company with the Securities and Exchange Commission.
Polaris Industries Inc. Statements of Operations (in thousands except per share data) Unaudited Second Quarter For the Six Months Ended June 30, Ended June 30, 1998 1997 1998 1997 Sales $274,711 $249,888 $484,712 $474,522 Cost of sales 210,502 189,630 373,699 364,772 --------- --------- --------- --------- Gross profit 64,209 60,258 111,013 109,750 Operating expenses 43,092 41,816 78,271 73,663 --------- --------- --------- --------- Operating income 21,117 18,442 32,742 36,087 Nonoperating expense (income) Interest expense 820 1,110 1,299 1,854 Equity in income of affiliates (1,607) (1,484) (3,156) (2,870) Other expense (income), net (727) (1,956) (1,096) (2,448) ---------- ---------- --------- --------- Income before income taxes $ 22,631 $ 20,772 $ 35,695 $ 39,551 Provision for income taxes 8,147 7,478 12,850 14,238 ---------- ---------- --------- --------- Net income $ 14,484 $ 13,294 $ 22,845 $ 25,313 ========== ========== ========= ========= Net income per share $ 0.55 $ 0.49 $ 0.87 $ 0.93 ========== ========== ========= ========= Weighted average number of common and potential common shares outstanding: Basic 26,128 26,840 26,183 27,098 ========== ========== ========= ========= Diluted 26,206 26,843 26,246 27,100 ========== ========== ========= ========= -0-