Polaris North America ORV unit retail sales decline more than 25% in Q1

Polaris today released its first quarter 2022 earnings results, with first quarter sales of of $1.957 billion being flat relative to the year-ago quarter.

First quarter reported earnings per share was $1.14, down 46% versus last year; adjusted earnings per share was $1.29, down 44% versus last year.

Primary drivers in the quarter included increasing supply chain challenges and inflationary pressures, partially offset by strong pricing; demand remains healthy.

Retail Sales for the quarter were down 22% versus last year when retail sales rose 70% in the same quarter, primarily driven by supply chain challenges.

“Sales for this quarter remained relatively flat to last year, depressed by continued supply chain pressures,” CEO Mike Speetzen said. “While much of our focus centers on navigating the highly volatile and challenging supply chain environment, demand for our industry-leading products and services remains healthy, as we continued to see high levels of pre-sold orders and low cancellations, strong short- and long-term repurchase rates, and record levels of PG&A attachments. We are making strategic investments in both innovation and operations to enable our long-term growth plans and productivity needs and strengthen our position as the global leader in powersports. The Polaris team remains laser focused on executing against our plans for this year and delivering for our customers, dealers and shareholders.”

Polaris Inc. (NYSE: PII) today released first quarter 2022 results, which ended March 31, 2022. The company reported worldwide sales of $1.957 billion, approximately flat versus the first quarter of 2021. North America sales of $1.667 billion represented 85% of total company sales and increased slightly from $1.663 billion in 2021. International sales of $290 million represented 15% of total company sales and increased 1%. Sales in the first quarter of 2022 were largely impacted by continued supply chain challenges reducing shipments, despite healthy demand, attractive pricing trends, and low dealer inventory levels, compared to a particularly strong first quarter in 2021.

As reported, first quarter net income of $70 million decreased 48% and diluted earnings per share (EPS) of $1.14 decreased 46% compared to the first quarter in 2021. Adjusted net income for the quarter was $79 million, down 46% and adjusted EPS of $1.29 was down 44%, in each case as compared to the first quarter of 2021.

Gross profit margin contracted 438 basis points to 20.3%. Adjusted gross profit margin of 20.3% contracted 447 basis points driven primarily by inflationary pressures and supply chain challenges, partially offset by strong pricing, a lower promotional environment and sourcing mitigation efforts.

Operating expenses were $313 million in the first quarter of 2022 compared to $313 million in the first quarter of 2021. Operating expenses, as a percentage of sales, were flat in the first quarter 2022 compared to the first quarter of 2021.

Off-Road segment results were primarily driven by these factors:

Sales were driven by growth in snowmobiles, commercial & government and defense, as well as robust pricing actions on new and pre-sold orders. This growth was partially offset by lower ORV sales.

Parts, Garments and Accessories (PG&A) sales increased 8%.

Gross profit margin performance was primarily driven by supply chain constraints and higher input costs, partially offset by increased pricing and lower promotional costs.

Polaris North America ORV unit retail sales were down high-20s percent. Estimated North America industry ORV unit retail sales were down high-teens percent. Polaris North America snowmobile unit retail sales for the 2021-2022 season ending March 31, 2022 were down approximately 15% with the industry down mid-single digits percent.

On-Road segment results were primarily driven by these factors:

Sales were impacted by lower shipments driven by supply chain challenges, despite strong demand, pricing and record low dealer inventory levels.

PG&A sales increased 19%.

Gross profit margin performance was driven primarily by favorable product mix and lower promotions costs, offsetting higher input costs driven by supply chain constraints.

North America unit retail sales for Indian Motorcycle were down approximately 30%. North America unit retail sales for the comparable motorcycle industry were down almost 10%.

Marine segment results were primarily driven by these factors:

Sales results were driven by favorable mix and pricing.

Gross profit margin performance was flat with increased pricing offset by higher input costs related to supply chain constraints.

Aftermarket segment results were primarily driven by these factors:

The 5% decrease in segment sales was driven by Transamerican Auto Parts sales, which decreased 9% from $193 million to $175 million in the first quarter of 2022. Powersports Aftermarket sales increased 16%.

Gross profit margin performance declined largely driven by supply chain challenges and inflationary pressures.

2022 BUSINESS OUTLOOK

The company continues to expect 2022 sales to be in the range of $9.215 billion to $9.455 billion, an increase of 12% to 15% over 2021. The company continues to expect adjusted EPS to be in the range of $10.10 to $10.40 for the full year 2022, an increase of 11 to 14 percent from 2021.