Polaris First Quarter EPS Up 14% On 14% Sales Growth
19 April 2000
Polaris First Quarter EPS Up 14% On 14% Sales Growth; Continued Strength in ATVs Helps Deliver Increased First Quarter Results
MINNEAPOLIS--April 19, 2000--Polaris Industries Inc. (NYSE/PSE: PII) today reported a 14% increase in net income per diluted share on a 14% increase in sales for the first quarter ended March 31, 2000. Sales increases across all product lines resulted in sales of $271.0 million in 2000 compared to $237.8 in the first quarter of 1999. Net income per diluted share for the 2000 first quarter totaled $.41 compared to $.36 in the comparable 1999 period. Net income for the first quarter was $9.7 million, up 8 percent from $9.1 million in the 1999 first quarter."With this strong start, we are on track to deliver record sales and a twelfth consecutive year of record net income for the full year 2000," said Thomas C. Tiller, Polaris president and chief executive officer. "These results demonstrate continued progress in our efforts to accelerate the company's growth and profitability."
First quarter sales benefited from strength in the all-terrain vehicle (ATV) business. Industry-wide, ATV retail sales continued to grow at more than 20 percent during the quarter, with Polaris ATV retail sales keeping pace with the industry growth rate. "With our leadership position in large four-wheel-drive and automatic transmission machines, we continue to benefit from strong consumer demand for these multi-purpose vehicles," said Tiller. Polaris expects to deliver its one-millionth automatic ATV during 2000; promotions around this milestone event are generating strong interest and enthusiasm among dealers and retail customers, said Tiller.
"Retail sales of Victory motorcycles during the quarter were encouraging," continued Tiller; "March 2000 was the best month ever for Victory retail sales and retail sales for the full quarter grew at double digit rates over last year's first quarter." Victory dealers now number more than 300 and shipments into Canada begin this spring. Longer term, the company plans to expand Victory sales overseas and continue to extend the model line to cover additional market segments, as it did in 1999 with the introduction of the V92SC SportCruiser.
As a result of another season of light snowfall across much of North America this past winter, season ending inventories of snowmobiles at Polaris dealers are at relatively high, but manageable levels. "In a year of declining sales for the industry, we believe we were the only manufacturer to post a gain in overall market share," said Tiller. "We introduced new 2001 models to our dealers in March and together we are excited about the prospects for this coming season on the strength of our new EDGE(TM) chassis, aggressive promotion and the power of our new branding campaign." Dealer orders to date for 2001 model snowmobiles, which are down modestly, are currently in line with the company's expectations, Tiller added.
Late in the first quarter, the company formally launched its first ever corporate branding initiative. "Under this program, we have begun to consolidate our advertising and brand strategies for each of our products under a common theme -- 'The Way Out' -- that evokes the sense of freedom and pleasure people derive from using our products," said Tiller. "Over the long term, dominant brands are proven to create value for shareholders. Our investment in this initiative will help us leverage a very valuable intangible asset -- the loyalty and emotional bond we enjoy with our customers. Development of a dominant brand is a key component of our overall growth strategy," said Tiller. To mark the launch of its corporate branding initiative, Tiller joined Polaris founders Edgar Hetteen and David Johnson and several other Polaris executives on a 900-mile snowmobile trek across Alaska last month.
During the first quarter 2000, Polaris extended the term of its finance company partnership agreement with Transamerica Distribution Finance. Polaris Acceptance offers floorplan financing to dealers and continues to expand the range of financial services programs it offers to dealers and consumers. In March, Polaris Acceptance introduced additional financial services offerings for dealers including insurance options and retirement and healthcare packages that dealers can offer their employees.
In the 2000 first quarter, the company repurchased 552,000 shares of its stock. Cumulative repurchases now total more than 5.1 million shares. Nearly 2.4 million authorized shares remain to be repurchased.
Polaris Industries Inc. designs, engineers, manufactures and markets snowmobiles, all-terrain vehicles, motorcycles, personal watercraft, the Polaris Ranger and related parts, garments and accessories for recreational and utility use. Polaris is the world's largest snowmobile manufacturer and one of the largest U.S. manufacturers of ATVs and personal watercraft. Polaris Industries Inc. trades on the New York Stock Exchange and the Pacific Stock Exchange under the symbol "PII" and 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 2000 sales, shipments and net income, 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
First Quarter First Quarter
Ended Mar. 31, Ended Mar. 31,
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2000 1999
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Sales $270,991 $237,769
Cost of Sales 206,397 181,296
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Gross profit 64,594 56,473
Operating Expenses
Selling & marketing 28,141 27,898
Research & development 7,964 7,333
General & administrative 13,181 8,931
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Total operating expenses 49,286 44,162
Operating Income 15,308 12,311
Non-operating Expense (Income)
Interest expense 1,351 823
Equity in income of affiliates (3,125) (2,005)
Other expense (income), net 1,967 (564)
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Income before income taxes 15,115 14,057
Provision for Income Taxes 5,366 4,990
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Net income $9,749 $9,067
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Basic Net Income Per Share $0.41 $0.36
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Diluted Net Income Per Share $0.41 $0.36
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Weighted average number of
common and common equivalent
shares outstanding:
Basic 23,866 25,186
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Diluted 23,887 25,224
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