Polaris Warns "Challenging Retail Demand"

[christopher]

Polaris Warns "Challenging Retail Demand" For ATVs & Jetskis​

Tuesday, Oct 22, 2024 - 04:50 PM

Polaris shares fell in premarket trading after the company, known for selling ATVs, UTVs, jet skis, and snowmobiles, posted disappointing third-quarter earnings. The company also cut its full-year earnings per share and sales forecast, citing sagging demand for outdoor vehicles due to elevated interest rates.

"As consumer confidence and retail demand remain challenging, we have maintained our focus on managing dealer inventory and delivering better operational efficiency," Polaris CEO Mike Speetzen wrote in a press release.



Polaris reported sales of $1.72 billion, down 23% YoY, missing the Bloomberg estimate of $1.77 billion. Sales were down modestly in off-road vehicles, motorcycles, and pontoons.

Here's a snapshot of third-quarter earnings (courtesy of Bloomberg):

• Sales $1.72 billion, -23% y/y, estimate $1.77 billion (Bloomberg Consensus)
• Off Road sales $1.40 billion, -24% y/y, estimate $1.41 billion
• On Road sales $236.5 million, -13% y/y, estimate $241.6 million
• Marine sales $85.9 million, -36% y/y, estimate $133.7 million
• Gross profit margin 20.6% vs. 22.6% y/y, estimate 21%
• Cash and cash equivalents $291.3 million, -1.4% y/y, estimate $337.8 millio
• Adjusted EPS from continuing operations 73c, estimate 89c

Visualizing Polaris' quarterly revenues... The cheap money era of Covid, plus folks moving out of cities to resort towns and or just rural America, sparked a massive demand for outdoor vehicles. As the Federal Reserve tightened monetary policy, which sent interest rates to the moon, affordability for these outdoor grown-up toys worsened, thus curbing demand.



As a result of a challenging market, one in which high interest rates have curbed consumer spending on jetskis, RZRs, and snowmobiles, Polaris had to lower its full-year earnings per share and sales guidance:

• Sees adjusted EPS -65%, saw -56% to -62%
• Sees sales -20%, saw -17% to -20%

Polaris explained more about its reasoning behind lowering its 2024 business outlook:

The company updated its 2024 sales outlook to be down approximately 20 percent relative to 2023 versus its previous outlook of down 17 to 20 percent relative to 2023. The company now expects adjusted diluted EPS attributed to Polaris Inc. common shareholders to be down approximately 65 percent relative to 2023 versus the prior outlook of down 56 to 62 percent.

In markets, Polaris shares in New York are down 7%. On the year, shares are down 15% (as of Monday's close). Shares are hovering at levels last seen since right before the Covid crash.



Also, watch MasterCraft Boat, MarineMax, Camping World, Brunswick, and Malibu Boats.

Polaris is a proxy of consumer health. Certainly, high interest rates and elevated inflation have crimped demand for ATVs, UTVs, and jet skis. The broad theme here is that a consumer slowdown continues to worsen.

https://www.zerohedge.com/markets/polaris-reports-challenging-retail-demand-atvs-jetskis

 

[greenthumb]

It's challenging times, we only made $355 million in profit.

 

[christopher]

It's challenging times, we only made $355 million in profit.

thats down 2% !

 

[Mafesto]

What those numbers represent that is not shown on the graph....
Showrooms are full of interest bearing non-current product.
This means slim if any margin remains to move this product.
This means salespeople relying on margin for commission checks need to find alternative methods to pay their bill & feed their families.
Also, much less 2025 product is being ordered.
This means factories must trim staff accordingly. These displaced workers will find a much different job market than was there 2 years ago.
To be blunt, it's a fooking mess right now.
We truly need to get the current regime out of the White House and begin the recovery process.

 

[christopher]

What those numbers represent that is not shown on the graph....
Showrooms are full of interest bearing non-current product.
This means slim if any margin remains to move this product.
This means salespeople relying on margin for commission checks need to find alternative methods to pay their bill & feed their families.
Also, much less 2025 product is being ordered.
This means factories must trim staff accordingly. These displaced workers will find a much different job market than was there 2 years ago.
To be blunt, it's a fooking mess right now.
We truly need to get the current regime out of the White House and begin the recovery process.

RIGHT ON THE MONEY BROTHER!

 

[NHRoadking]

Polaris has a few issues not discussed, to include nothing really new to drive sales and poor quality.

My dealer sells Doo and Poo and said Polaris generates 3 times the service issues and many loyal Poo owners are switching to Doo or Cat because of all the issues with Polaris.

No one issue is at fault, but lack of quality seems to be a big one.

 

[tuneman]

Yep, quality issues is why I bought a Cat this year.

 

[Rob.G]

Their quality issues are why I'm abandoning Polaris. I have three Polarises right now... a Sportsman 570 bought new in 2022, my 2023 Khaos bought last fall, and a 2024 Sportsman 850 I got in March. The 570 has been flawless. The sled is fine but last winter sucked so bad it only has 300 miles on it. The 850, however, got a stop-ride recall announced in (I think) June, which was not solved until SEPTEMBER. So the entire Summer gone unable to use it... yet still making payments on it.

Between that and the last sled recall over non-ethanol fuel (a recall that is total BS IMO and will give them the means to deny warranty claims due to ethanol fuel use), I'm done. I'll keep the 570, but the 850 has been for sale for months and will probably never sell because of big discounts on new leftover units, and my sled, which probably won't sell due to extremely low resale value. I hate Polaris.

 

[christopher]

So Many Recalls..
I can only begin to imagine what that does to your customer base.

 

[ullose272]

its too bad i cant ride a skidoo to save my life, or id probably buy one, so its Polaris or Cat for me, and we have one of the best Polaris dealers around so they get my business.

 

[Mafesto]

its too bad i cant ride a skidoo to save my life, or id probably buy one, so its Polaris or Cat for me, and we have one of the best Polaris dealers around so they get my business.

A good local dealer does make recalls a non-issue.

 

[MTsled3]

its too bad i cant ride a skidoo to save my life, or id probably buy one, so its Polaris or Cat for me, and we have one of the best Polaris dealers around so they get my business.

I've switched to Ski-Doo twice but came back to Polaris because they just handle so much better. I've wanted to go Cat but they haven't been quite good enough for me to pull the trigger. The 2019 alpha was close but I ultimately went Axys. The Catalyst seems very promising, if I get to throw a leg over an 858 this winter I can see myself snowchecking one for next year. That is, if they are as good as some reviews claim.

 

[Rob.G]

I got to ride a friend's Gen5 last season... did not like it at all. It was VERY hard to get up on one ski and the throttle was very twitchy.

I look forward to picking up my Catalyst next weekend (Nov 2nd) and then getting it on the snow.

 

[christopher]

I got to ride a friend's Gen5 last season... did not like it at all. It was VERY hard to get up on one ski and the throttle was very twitchy.

Interesting.
As a rule I would say the Flex-Edge Track and the T-Motion make it "Easier" to get up on one ski, but HARDER to maintain with any degree of precision.

 

[Sheetmetalfab]

Interesting.
As a rule I would say the Flex-Edge Track and the T-Motion make it "Easier" to get up on one ski, but HARDER to maintain with any degree of precision.

I think it’s easier to get halfway on edge with TeaMo / Flexedge.

(Great for skeeter meadow mini carving)

But fully on edge and in control in steep terrain?

Not so much.

 

[christopher]

But fully on edge and in control in steep terrain?
Not so much.

Agreed.
that Calls for X-Motion.

 

[ullose272]

I've switched to Ski-Doo twice but came back to Polaris because they just handle so much better. I've wanted to go Cat but they haven't been quite good enough for me to pull the trigger. The 2019 alpha was close but I ultimately went Axys. The Catalyst seems very promising, if I get to throw a leg over an 858 this winter I can see myself snowchecking one for next year. That is, if they are as good as some reviews claim.

I liked my 2020 Alpha, but it took alot of mods to get it to where i liked it. and then it would randomly wash out. So i went back to Polaris the next year.

 

[Sheetmetalfab]

Agreed.
that Calls for a different platform.

Fixed it for you.