Polaris Reports Record Sales and Earnings for the Second Quarter
MINNEAPOLIS--July 17, 2001--Polaris Industries Inc. today reported net income totaling a record $17.1 million or $0.72 per diluted share compared to $16.2 million or $0.68 per diluted share for the second quarter of 2000, a six percent increase. Lower operating expenses and higher sales volume from snowmobiles and parts, garments and accessories contributed to the improvement in net income for the quarter. Sales for the quarter totaled a record $362.5 million, up five percent from last year's second quarter sales of $344.7 million.
"We are pleased to continue to improve our results in an economy that has slowed considerably from the prior year," commented Tom Tiller, Polaris' President and Chief Executive Officer. "We experienced higher sales in snowmobiles and sales of Polaris parts, garments and accessories continued its strong growth trend of recent periods. The improvements in these product lines more than offset the softness we are currently experiencing in some of our other businesses, particularly the ATV business."
Six Months results
For the six months ended June 30, 2001, Polaris reported a six percent increase in net income per share (diluted) of $1.16 per share compared to $1.09 in the first six months of 2000. Net income for the first half of 2001 the prior year. Sales for the six months ended June 30, 2001 totaled $656.5 million, up five percent from $623.8 million in the comparable period of 2000.
Snowmobiles, Victory motorcycles and Parts, Garments and
Accessories drive sales growth during the quarter
Snowmobile sales remained strong during the quarter, increasing 30 percent over last year. Low season-ending dealer inventories, an extensive line of new models introduced for the upcoming season and the new Snow Check(TM) Select program that allows consumers to customize their snowmobile, accounted for the increased sales.
"Our dealers and consumers are very excited about our new lineup of snowmobiles introduced for the 2001 - 2002 season," commented Mr. Tiller. "In addition, the ability to customize sleds to their liking has been a big hit with consumers. The tag line `If you can dream it, we can build it' best characterizes this new program we call Snow Check(TM) Select."
Sales of Victory motorcycles improved considerably during the second quarter, increasing 244 percent over an unusually low comparison in the second quarter a year ago. Higher retail sales resulting from continued consumer acceptance of the product along with targeted advertising and promotional programs drove the improvement in wholesale sales for the quarter.
Tiller stated, "The Victory motorcycle business has great potential for us over the long term. We continue to establish ourselves in the cruiser motorcycle market segment and expect continued growth throughout the remainder of the year."
Parts, Garments, and Accessories (PG&A) continued to show good growth during the second quarter 2001, with sales up 21 percent over last year's second quarter. All components of the parts, garments, and accessories business showed improvements over the prior year driven by additional product offerings, the new online store becoming more visible and the greater focus being placed on this product line.
"PG&A is our highest margin business, " commented Mr. Tiller. "We have put a lot of time and effort into making this business a bigger piece of our overall portfolio and we continue to see great results. PG&A will remain a growth driver for us."
Polaris' ATV sales declined six percent during the second quarter 2001 compared to the second quarter 2000 as the heavier than usual advertising and promotional activities by several competitors continued throughout the second quarter.
Tom Tiller commented, "In spite of a slowing overall economy, the ATV industry experienced continued growth at the retail level although at a lower rate than in previous years. We continue to see a more competitive landscape develop as many of our competitors move to gain market share through aggressive promotional activities and new product introductions. To compete effectively, we have also spent more aggressively in the area of dealer and consumer promotions. This effort has proved successful, with our ATV retail sales increasing during the second quarter 2001 over the same period in 2000. In addition, our exciting new 2002 model ATVs will be introduced to the dealers during the third quarter".
Polaris' Personal Watercraft (PWC) sales declined during the second quarter 2001 by 46 percent from the second quarter a year ago. Timing of shipments between the first and second quarters of 2001, along with higher promotional expenses required to remain competitive in a slowing economy, were the main reasons for the decline.
During the second quarter 2001 the company repurchased 334,000 shares of its common stock. Cumulative shares repurchased since the inception of the current 7.5 million share authorization totals nearly 6.3 million shares.
Mr. Tiller, addressing Polaris' expectations for the second half of the year said, "We continue to reiterate our previously announced guidance of six to eight percent sales growth for the full year 2001. Earnings per share in the second half of the year is expected to accelerate to achieve our full year 2001 forecasted earnings per share goal of $3.80 to $4.00 per share, or 9 to 14 percent growth. Based on our current knowledge and experience in the markets we serve, we continue to believe the range for sales and earnings per share remain very achievable for the full year."
Mr. Tiller continued "the growth in sales and the acceleration in earnings per share growth in the second half of the year is anticipated to be driven by continued strength in snowmobiles along with solid growth in our PG&A business. Additionally, we expect continued expense savings from the cost control program implemented earlier this year. Based on our current line of product offerings and additional new products to be introduced in the fall, we are well positioned for continued growth in both sales and earnings this year and into the future."
POLARIS INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except for Per Share Data)
UNAUDITED
Second Quarter For the Six Months
Ended Ended
6/30/01 6/30/00 6/30/01 6/30/00
------------------- -------------------
Sales $362,499 $344,698 $656,520 $623,770
Cost of Sales 288,198 269,832 516,383 487,357
--------- --------- --------- ---------
Gross profit 74,301 74,866 140,137 136,413
Operating Expenses
Selling & marketing 29,566 29,429 58,481 54,523
Research & development 8,059 8,101 16,537 16,065
General & administrative 12,876 13,852 26,030 27,033
--------- --------- --------- ---------
Total operating expenses 50,501 51,382 101,048 97,621
--------- --------- --------- ---------
Operating Income 23,800 23,484 39,089 38,792
Non-operating Expense (Income)
Interest expense 2,532 2,164 4,644 3,515
Equity in income of
affiliates (2,957) (3,272) (6,371) (6,397)
Other expense (income), net (1,846) (505) (1,168) 1,462
--------- --------- --------- ---------
Income before income taxes 26,071 25,097 41,984 40,212
Provision for Income Taxes 8,994 8,909 14,484 14,275
--------- --------- --------- ---------
Net income $ 17,077 $ 16,188 $ 27,500 $ 25,937
========= ========= ========= =========
Basic Net Income Per Share $ 0.74 $ 0.69 $ 1.19 $ 1.09
========= ========= ========= =========
Diluted Net Income Per Share $ 0.72 $ 0.68 $ 1.16 $ 1.09
========= ========= ========= =========
Weighted average number of
common and common equivalent
shares outstanding:
Basic 23,077 23,586 23,115 23,726
Diluted 23,728 23,642 23,707 23,764
Selected Balance Sheet Data
---------------------------
6/30/01 6/30/00
-------- --------
Trade Receivables (Net) $74,347 $51,293
Inventories (Net) $197,493 $169,158
Total Assets $576,510 $500,011
Accounts Payable $122,705 $110,373
Borrowings under credit
agreement $95,054 $90,000
Shareholders' Equity $202,984 $169,357
Business Unit Information
-------------------------
Second Quarter Ended For the Six Months Ended
6/30/01 6/30/00 % chg 6/30/01 6/30/00 % chg
------------------------ ------------------------
Snowmobiles $ 97,594 $ 75,327 30% $116,813 $ 76,995 52%
All-terrain vehicles 194,230 206,367 (6)% 387,039 409,925 (6)%
Personal Watercraft 10,027 18,466 (46)% 36,159 42,701 (15)%
Victory Motorcycles 10,302 2,993 244% 15,854 13,099 21%
Parts, Garments &
Accessories 50,346 41,545 21% 100,655 81,050 24%
------------------------ ------------------------
Total Sales $362,499 $344,698 5% $656,520 $623,770 5%
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