Wow, that's a lot of cash
- Thread starter Snowbird11
- Start date
Not related to sleds though.
.
.
https://www.fool.com/investing/2017/03/28/another-year-another-recall-mess-polaris-industrie.aspx
similar article as above.
similar article as above.
I thought Polaris built sleds?
J
JJ_0909
ACCOUNT CLOSED
2015: Warranty Costs - $73M - or 2% of total sales
2016: Warranty Costs - $195M - or 6% of total sales.
So yeah, in 2016, Polaris had 3x the warranty rate as a portion of sales as they did in 2015 (most was RZR related). That's a problem, for sure, but warranty is always something a company will have to deal with and sets cash aside for.
Overall, Polaris is fine financially - they turn a profit. None of this warranty info is new news. Now if they note some big warranty problem for FY18, that'd be unexpected.
Is this the reason they didn't unveil something new in 2018 on the sled side of things? The only way that is correct is that they are going to spend as long as they need to keep their warranty rate super low. So maybe it is, but I'd doubt it.
They ended the year with plenty of cash and have access to both the debt and equity markets if they really were on the ropes or needed additional capital.
Either way, I wouldn't pay too close of attention to the piece of "journalism".
2016: Warranty Costs - $195M - or 6% of total sales.
So yeah, in 2016, Polaris had 3x the warranty rate as a portion of sales as they did in 2015 (most was RZR related). That's a problem, for sure, but warranty is always something a company will have to deal with and sets cash aside for.
Overall, Polaris is fine financially - they turn a profit. None of this warranty info is new news. Now if they note some big warranty problem for FY18, that'd be unexpected.
Is this the reason they didn't unveil something new in 2018 on the sled side of things? The only way that is correct is that they are going to spend as long as they need to keep their warranty rate super low. So maybe it is, but I'd doubt it.
They ended the year with plenty of cash and have access to both the debt and equity markets if they really were on the ropes or needed additional capital.
Either way, I wouldn't pay too close of attention to the piece of "journalism".
Last edited:
No More
This is why I ride a Cat for now. To say this doesn't affect sleds is wrong. The same short cuts are taken and the same quality applies across the brand. I work to hard for my money to watch it burn or sit in the shop. Unfortunately it seems like Doo is headed down the same path, but not to this extreme (no fires or deaths). I am not flag waving for Cat either. It seems like a lot of the same quality issues are prevalent in the industry. I am fine without the "latest and greatest," I just want something that works all the time. Who knows, I may have to spend more time doing something else.
P.S. Is it possible to change your "screen name?"
This is why I ride a Cat for now. To say this doesn't affect sleds is wrong. The same short cuts are taken and the same quality applies across the brand. I work to hard for my money to watch it burn or sit in the shop. Unfortunately it seems like Doo is headed down the same path, but not to this extreme (no fires or deaths). I am not flag waving for Cat either. It seems like a lot of the same quality issues are prevalent in the industry. I am fine without the "latest and greatest," I just want something that works all the time. Who knows, I may have to spend more time doing something else.
P.S. Is it possible to change your "screen name?"
1. Financially, this is a burb. Just the way it is when you're a $5B company. Product and market conditions, and dealer health, drive new product introductions, these costs and reserves should have had nothing to do with the lack of new RMK stuff. And, if anything, they likely over reserved - just the way accounting rules get applied nowadays.
2. These are pre-tax costs. The post-tax costs could be 25% lower, at least.
3. Not saying poo doesn't have some quality issues with their sleds that they couldn't improve on, and certainly must recognize. They are not the only one, either.
4. What's most interesting for poo right now, and it's highlighted in the article - they are driving to boost revenue, big time. They will be stuffing the dealer pipe with every plunger they can find. Lots of sleds, and ATVs, UTVs will be built, and their will be some great deals for this model year. Great snow and good sell thru in the mountain states for 2017 will only help them stuff more sleds onto the dealer's floors. Some smok'in deals are gonna happen in the poo world, especially if 2018 starts out slow snow-wise.
2. These are pre-tax costs. The post-tax costs could be 25% lower, at least.
3. Not saying poo doesn't have some quality issues with their sleds that they couldn't improve on, and certainly must recognize. They are not the only one, either.
4. What's most interesting for poo right now, and it's highlighted in the article - they are driving to boost revenue, big time. They will be stuffing the dealer pipe with every plunger they can find. Lots of sleds, and ATVs, UTVs will be built, and their will be some great deals for this model year. Great snow and good sell thru in the mountain states for 2017 will only help them stuff more sleds onto the dealer's floors. Some smok'in deals are gonna happen in the poo world, especially if 2018 starts out slow snow-wise.
J
JJ_0909
ACCOUNT CLOSED
...because Cat is crushing it? They don't operate at a profit and haven't for sometime. There is a reason they were acquired. So perhaps their warranty rate was better in 2016, but overall, they can't seem to make their business model work, which I'd argue is a far bigger problem than an unrelated-to-sleds UTV problem.
Warranty and warranty related costs are a "thing" for every company in manufacturing.
The story is "2016 saw higher warranty rates for Polaris". Beyond that, there is no story here.
Ps, my dayjob is in qualitative financial analysis...
In all honesty this article shows me that Polaris is doing one hell of a job to try and keep their customers happy and not turn away someone who feels they have a genuine warranty claim. I admire a manufacturer who strives to do right by their market and correct anything that may be faulty.
Other manufacturer warranty costs could simply be lower by telling customers no more often. I don't know that or think that, but it's a possibility.
Other manufacturer warranty costs could simply be lower by telling customers no more often. I don't know that or think that, but it's a possibility.
My day job is engineering and if I did things like Polaris does a lot of people could get really messed up. My point is that it doesn't have to be like this. They could easily do a better job that would cost more up front, but save in the end. I just expect more for my $.
J
JJ_0909
ACCOUNT CLOSED
So you know of somewhere else you can buy a vehicle that has supercar power to weight ratios with a warranty and can be found for less than $12K?
I'm all ears.
Polaris had a warranty problem outside of sleds in 2016. I am sure someone did lose their job over it and I'm sure they are taking steps to make sure it doesn't happen again. The irony to me typing this is it doesn't even pertain to sleds, it was a UTV thing.
For you to say "...if I did things like Polaris does a lot of people could get really messed up. My point is that it doesn't have to be like this. They could easily do a better job that would cost more up front, but save in the end" is the very definition of arm chair qbing. Easy to makes calls in the rear views.
For a company this big, with this many units sold, its a delicate balance of cost, durability and performance. I bet Polaris could make a 350 pound sled that has 200 horse and last 5,000+ miles without a top end. Problem is, it'd cost $80K. I think all the manufacturers have struck a great balance of cost and durability - again, its one reason I sled. The performance we really get is insane considering the price point.
They all break. I'm not a fanboy of one over the other, but I am blown away at what we get for our money.
Feel free to go through Cat's filings, Doo's filings and PII's filings - they all speak to a similar narrative. Its a hyper competitive space. If anyone was really, truthfully, bad, they'd be done...
EDIT: Just to elaborate, I'm guessing you work on more life and death "things", maybe a civil engineer or something. Of course if this is your space, the "utility" of screwing up, say, a bridge collapses, is far larger than an a arm that bends prematurely.
Of course, the 'what' you are working on has a big impact on the cost we are all willing to pay...
Last edited:
And you ride a Cat and expect more for your money??? I owned three cats and never again, exploding diamond drives, terrible ride, junk clutches. Polaris sells 20 times more SXS than cat, and the ones they do sell have lots of issues around here the resale on cat SXS is terrible.
Before this gets too sidetracked, point is they all have issues but it's a game of probability and with more units sold you run the risk of more warranties. Simple math.
J
JJ_0909
ACCOUNT CLOSED
But that wasn't the math dude - the math is as a percentage of units sold they had a higher warranty rate, not just a higher number of total units with warranty issue...
I skimmed the article cause I really don't give a ****, I enjoy my Polaris products and most the warranty issues I've ever had have been caused by me. Not a faulty unit.
So what you are saying is they didn't sell more units this past year than the year before?
So what you are saying is they didn't sell more units this past year than the year before?
J
JJ_0909
ACCOUNT CLOSED
...again....
2015: Warranty Costs - $73M - or 2% of total sales
2016: Warranty Costs - $195M - or 6% of total sales
So they went from a warranty rate of 2% to 6%, that's a 3x multiplier.
And yeah, 6% is high, but its not a sled thing according to the language in their latest 10K.
Last edited:
J
JJ_0909
ACCOUNT CLOSED
Edgar - 10K filing.
